Provider Change of
Ownership
Providers (as defined in 1861(u) of the Act, and institutional suppliers such
as RHCs) that undergo a change in their ownership structure are required to
notify CMS concerning the identity of the old and new owners. They are
also required to inform CMS on how they will organize the new entity and when
the change will take place. A terminating cost report will be required
from the seller owner in all CHOWs for certification purposes. There are
five types of changes that can occur:
1. A CHOW in accordance with 42 CFR 489.18;
2. Changes in the ownership structure to an existing provider that do
not constitute a CHOW;
3. A new owner who purchases a participating provider but elects not to
accept the automatic assignment of the existing provider agreement, thus
avoiding the old owner’s Medicare liabilities;
4. An existing provider who acquires another existing provider (acquisition/merger);
and
5. Two or more existing providers who are totally reorganizing and
becoming a new provider (consolidation).
Providers that undergo a change of ownership will usually continue with the
same FI that served the previous owner. However, if the prospective owner
does not wish to accept the automatic assignment of the existing provider
agreement, this means that the existing provider agreement is terminated
effective with the CHOW date. The regional office must be notified in
writing of the CHOW per instructions contained in section 3210.5 of the State
Operations Manual. The prospective owner provides a notice 45 -days in advance
of the CHOW to the CMS/RO to allow for the orderly transfer of any
beneficiaries that are patients of the provider. All reasonable steps
must be taken to ensure that beneficiaries under the care of the provider are
aware of the prospective termination of the agreement. There may be a
period when the facility is not participating and beneficiaries must have
sufficient time and opportunity to make other arrangement for care prior to the
CHOW date.
