Maintaining Medicare “Conditions of Participation” Following a Shift in Ownership

October 19, 2023by @admin-millinglaw0
By Sarah Fisher

The U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS), as well as Louisiana’s State Licensing Boards, have an interest in determining whether Medicare providers meet, and continue to meet, the Medicare Conditions of Participation.

Medicare providers include nursing homes, hospitals, doctors & clinicians, home health services, hospice care, inpatient rehabilitation facilities, long-term care hospitals, dialysis facilities, and durable medical equipment (DME) suppliers.
The respective state boards overseeing these providers include, but are not limited to:
  • Louisiana Board of Drug and Device Distributors
  • Louisiana Board of Examiners of Nursing Facility Administrators
  • Louisiana Board of Pharmacy
  • Louisiana Physical Therapy Board
  • Louisiana State Board of Chiropractic Examiners
  • Louisiana State Board of Medical Examiners
  • Louisiana State Board of Nursing
  • Louisiana State Board of Optometry Examiners
  • Louisiana State Board of Practical Nurse Examiners
There are a great many requirements that must be followed when a State certified Medicare provider seeks to shift ownership through a Change of Ownership (“CHOW”) or a Merger/Acquisition (“M&A”), though key differences exist between a CHOW and an M&A.
CHOW generally occurs when a Medicare provider is purchased by another organization. The CHOW results in the transfer of the former owner’s identification number and provider agreement to the new owner (or purchaser).  This transfer also includes any Medicare outstanding debt of the former owner.  The purchaser has a right to choose whether to accept the transfer of the existing provider agreement between Medicare and the provider or to decline the provider agreement, resulting in the termination of that existing provider agreement.  If the purchaser does not accept a transfer of the existing provider agreement, then the purchaser is considered a new applicant for Medicare purposes.
Although the change in ownership may not always look like a traditional “sale,” if entity ownership changes significantly (usually by 50% or more), or if the entity moves to another state, a CHOW application and fee must be submitted to Medicare, and the relevant State board(s) must be timely notified.
An M&A is different from a CHOW.  An M&A generally occurs when a currently enrolled Medicare provider purchases or is purchased by another enrolled provider.  In these situations, only the purchaser’s CMS Certification Number (CCN) and tax identification number (TIN) remain.  In the case of an M&A, the seller/former owner’s CCN dissolves.  This is different than a CHOW, wherein the seller/former owner’s CCN typically remains intact and is simply transferred to the new owner.
Similarly, but separately, a consolidation occurs when two or more enrolled Medicare providers join to form a new business entity.  Consolidations are different from M&As.  In an M&A, two or more entities combine, but the CCN and TIN of the purchasing entity remain intact.  In a consolidation, however, the CCN and TIN of the joining entities dissolve, and a new TIN and CCN are assigned to the new entity.
In almost all the above scenarios, the Medicare provider’s State-issued accreditation (per the Louisiana Department of Health, Office of the Secretary) shall not be assignable or transferable.  If the licensed Medicare provider undergoes any major ownership change, the provider must apply for a new certificate from the provider’s respective licensing board, usually within 30 days of any shift in ownership. These notice and timing requirements vary depending on the provider’s licensing board and the size and nature of the shift in ownership.

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