How to Set Up a Payment System for a Home Care Agency in Texas

To set up a payment system for a home care agency in Texas, open a business bank account, agree on payment terms, and connect your visit records to billing. You also need a routine for collecting payments and following up when money is late.

The setup will look different for private-pay clients and government-funded care. A family may pay you by card or bank transfer. Medicaid, on the other hand, requires claims, service approvals, and specific visit records before you can get paid.

This guide focuses on non-medical home care, or Personal Assistance Services (PAS). We’ll walk you through the setup, explain the Texas billing rules that matter, and show you how to catch problems before unpaid bills start to build up.

Which Payers Will Your Texas Home Care Agency Accept?

First, decide who will pay for your services. This could be the client, a family member, an insurer, or a government program. Each payer has its own payment terms and billing process, so choose the ones you plan to accept before you buy software.

If you plan to accept government-funded care, you’ll also need to follow the program’s billing rules. The Texas Health and Human Services Commission (HHSC) oversees several attendant-care programs.

Primary Home Care and Community Attendant Services are Medicaid-related programs. Family Care uses non-Medicaid funding. Keep each program’s rules separate rather than assuming all government-funded care is billed the same way.

Some services require electronic visit verification (EVV), which records the required details of a care visit. Claims for these services go through the Texas Medicaid & Healthcare Partnership (TMHP) for visit matching.

The table below shows the main payment routes your home care business may need.

Scroll sideways to see the full table

Source: Compiled by 123 Consulting Solutions from HHSC’s EVV claims guidance, VA claims guidance, and payer-specific arrangements.

Use a business bank account for agency income and expenses. Keeping business money separate makes it easier to see what has been paid and what you have available for payroll.

At 123 Consulting Solutions, we also recommend planning how you will cover payroll during payment delays. An approved service authorization or submitted claim is not cash you can use to pay staff.

If you’re still deciding which payment sources to pursue, our guide to home care payers explains the options in more detail.

How Should You Bill Private-Pay Home Care Clients?

Before the first visit, confirm who has agreed to pay, who should receive invoices, and whose account will be charged. These may be different people. The daughter arranging care, for example, may not be the person paying for it.

Texas requires a written service agreement under Title 26 of the Texas Administrative Code, §558.292. Include charges when the client or family pays some or all of the cost, or on request. Review the terms with them and keep their acknowledgment in the client’s record.

Along with the other required agreement terms, explain:

• Rates, billing frequency, due dates, and payment methods.
• Deposits, advance payments, how they are applied, and refund terms.
• Cancellations, late or failed payments, and any permitted fees.
• Recurring-payment permission and how you give notice of rate changes.

If you take a deposit or payment in advance, explain what it covers and when it will be applied or returned. Track each client’s balance separately, including money received, used, and refunded.

A refundable deposit differs from payment for upcoming care. Ask your accountant how to record each in your books and tax records. Some of the money you receive may still be owed back as services or a refund.

For pricing help, read what Texas home care agencies should charge.

Once your payment terms are clear, choose a billing schedule you can follow consistently, such as weekly or biweekly. Build each invoice from verified visits and show the dates, services, hours, rates, credits, total due, due date, and payment instructions.

List any permitted cancellation charge separately. Don’t record hours of care that were never provided just to collect a fee.

How Can Clients Pay Your Home Care Agency Securely?

Cards, Automated Clearing House (ACH) bank transfers, and checks can cover most private-pay needs. Compare payment processing fees, deposit timing, refunds, and links to your billing software. Also ask how the provider handles failed payments and disputes.

Before adding a card surcharge, check current Texas law, card-network rules, and processor terms; it may not be allowed for every card type.

Let your processor securely hold payment details. The Payment Card Industry Data Security Standard (PCI DSS) prohibits storing card security codes after authorization, even if encrypted. Keep full card details out of ordinary email and spreadsheets.

Use invoice numbers in payment messages, without care notes or diagnoses.

Autopay can make payment easier for families, but a signed service agreement does not replace permission to debit an account. Explain when charges occur, how amounts are calculated, and how the account holder can cancel permission.

For recurring consumer ACH debits, Regulation E requires written or similarly authenticated authorization and a copy for the account holder. Use your bank or processor’s secure form and retain proof of permission.

Get permission from the account holder, including when an adult child pays for a parent’s care. For stored cards, follow the processor’s consent and recurring-payment rules.

What Should Your Home Care Billing Software Do?

Your home care payment system should connect completed visits to invoices or claims, record payments, and show what remains unpaid. Load each payer’s rates, codes, approved units, authorization dates, billing route, and deadlines.

Ask vendors to show a sample client from intake through payment. Can staff spot an unbilled visit? Can they find a denied claim? Check staff access, reports, data exports, software links, and all setup, subscription, and transaction costs before you commit.

Billing and payroll can use the same verified visit data, but their amounts differ. Caregiver wages, taxes, travel, and other employment costs are separate from client charges and payer rates.

How Do You Submit Home Care Claims to Payers?

For services that require EVV, complete your setup and staff training before providing care. HHSC offers HHAeXchange at no cost, with optional paid add-ons. Approved proprietary systems are another option; ordinary timekeeping software does not automatically qualify.

For managed care, TMHP performs matching before the managed care organization (MCO), or health plan, processes the claim. Sending an EVV-required claim straight to the MCO can cause rejection.

For EVV-required attendant claims, follow HHSC’s billing sequence:

1. Confirm eligibility and service authorization, including dates, codes, and approved units.
2. Check completed visits, correct errors, and confirm acceptance in the EVV Aggregator, the state’s central visit database.
3. Submit through TMHP using the required claims route.
4. Review matching results and the payer’s claim decision, then record any payment against the claim.

A successful EVV match does not guarantee payment. The claim still has to meet the payer’s other billing requirements.

Know Each Payer’s Filing Deadlines

Medicaid managed care claims generally must be received within 95 days of service, subject to exceptions. For long-term services billed as a date span, that clock generally starts with the first service date in the span.

HHSC long-term care fee-for-service has separate program and year-end rules. TriWest’s guide sets a 180-day deadline for authorized CCN claims. Record correction and appeal deadlines separately, using each payer’s current instructions.

What Should You Check Before Your First Client?

Before you start, write a short payment procedure and train intake and billing staff. Make clear who sends bills, records payments, follows up, approves refunds, and keeps records secure. Then check that:

• Bank details, payer approvals, rates, and authorizations are correct.
• Client agreements and any recurring-payment permissions are ready.
• Staff can trace a sample visit through billing, payment recording, and reports.
• Someone handles weekly reconciliation and tracks filing and appeal deadlines.

Use a test or demonstration environment to try the process. Don’t submit a claim for care that has not occurred.

How Do You Check That Payments Reached Your Bank Account?

Reconciliation means matching visits, bills, payments, and bank deposits. It helps you catch care that was never billed, payments applied to the wrong account, and fees that explain a smaller deposit.

Give one person responsibility for this weekly review, with a backup for absences:

• Match completed visits to invoices or claims. Flag unbilled visits and the reason.
• Apply receipts to the right bill using the payer’s payment statement.
• Match payment records to bank deposits and processor payouts.
• Resolve fees, short payments, credits, refunds, and unassigned receipts.

Give your accountant the reconciled records. Where staffing allows, have a second person review refunds, write-offs, and reconciliation. In a small home care company, the owner can review changes and deposits.

How Do You Follow Up on Unpaid Home Care Invoices and Claims?

Use an accounts receivable (AR) report to see money still owed. Separate private-pay balances from payer claims so each gets the right follow-up. Group balances into 0–30, 31–60, 61–90, and over 90 days, using a consistent invoice-date or due-date basis.

For each balance, record the amount, due or filing date, reason unpaid, last contact, next action, and person responsible. Review the report weekly, giving priority to deadlines and older or larger balances.

When a private payment fails, contact the person who agreed to pay. They may need to update their card or bank details. Follow the agreement for reminders and next steps, and retry debits only when authorization and processor rules allow.

A failed payment should not automatically stop ongoing care. Have your administrator review the agreement and Texas discharge rules. The rule has an advance-notice exception for nonpayment, subject to federal law. Document the decision and communications.

For rejected or denied claims, check the payer’s report, eligibility, authorization, codes, visit data, and EVV result. Submit a correction or appeal as instructed. Managed care claim appeals go to the MCO. Keep proof of receipt and fix recurring errors.

Each month, review unbilled visits, payment delays, aging balances, failed payments, and denial reasons by payer. Recheck the setup when rates, software, or payer contracts change.