Process involving change of ownership with Medicare

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.

After the CHOW has taken place, the RO acknowledges the refusal to accept assignment in a letter to the new owner, with copies to the State Agency (SA) and the FI.  The RO completes a form CMS-2007 with the date the agreement is no longer in effect, noting that the termination is due to the new owner’s refusal to accept assignment of the provider agreement.

If the new owner refuses to accept assignment and also wishes to participate in the Medicare program, the RO will first process the refusal as indicated above and then treat the new owner as it would any new applicant to the program.  The RO will obtain and process the application documents, have the SA perform an initial survey and if all the requirements for participation are met, assign an effective date of participation.  The earliest possible effective date for the applicant is the date that the RO determines that all Federal requirements are met.  Once this is completed, a new provider agreement with a new provider number will be issued to the new owner.  The provider will be assigned to the local FI.



Change of address and Type 2 National Provider Identifier (NPI)
Q: A group has three practice locations and two of those practice locations are changing addresses and will have their own Type 2 Organization National Provider Identifier (NPI). What needs to be done to update the enrollment information, and how should claims be submitted that were generated with the old Type 2 Organization NPI?

A. For enrollment information -- the group would need to provide the new addresses and NPIs for the locations. This can be done via the Internet using the Provider Enrollment, Chain, and Ownership System (PECOS) external link or via the appropriate paper CMS-855 form external link.
For submission of claims -- if the Provider Transaction Access Number (PTAN) is the same for all three locations, then use the appropriate NPI for the location where the services were rendered. Since the PTAN is the same for all three locations, all three of the NPIs, the original one and the two new ones, would be linked to this PTAN.
If the PTAN is different for all three locations, then you must use the current NPI that has been associated with that PTAN. For the new addresses, you would be required to use the new NPIs on all claims once the information has been updated.


Revalidation
Q: I just received a revalidation request letter from First Coast Service Options Inc. (First Coast). Where can I find more information regarding the provider revalidation process and how to properly respond to a revalidation request?

A: To find more information about the revalidation process and how to properly respond, please view First Coast’s Revalidation webpage and the Centers for Medicare & Medicaid Services’ (CMS’) Revalidations webpage external link. From these webpages, you will find several resources including the frequently asked question documents, First Coast Revalidation FAQs and CMS Revalidation FAQs


Reportable event
Q: What does Medicare consider to be “reportable event” (with regard to the provider/supplier’s enrollment record)? How long does a provider/supplier have to notify their Medicare administrative contractor (MAC) of the event?

A: Since providers and suppliers are responsible for maintaining and reporting changes to their enrollment information, a “reportable event” is one that requires an update to that record. The required timeframe for notifying the provider/supplier’s Medicare administrative contractor (MAC) of the change is based upon the type of “reportable event” that occurred
The following types of “reportable events” must be reported no later than 30 days after the event has occurred:
• Change in location/address -- occurs when a provider/supplier establishes, moves, or closes a practice or facility. It may also occur if the address is changed in any way.
• Change in final adverse action -- occurs when a physician is debarred or excluded by any federal or state health care program, has his/her medical license suspended or revoked by a state licensing authority, was convicted of a felony within the last 10 years, has his/her Medicare billing privileges revoked by a Medicare contractor, or has a revocation or suspension by an accreditation organization.
• Change in ownership -- occurs when there is a change in authorized officials or delegated officials for the organization.
The following types of “reportable events” must be reported no later than 90 days after the event has occurred:
• Change in business structure -- occurs when a provider or supplier changes the business structure of the practice (e.g., sole proprietorship to sole incorporated owner).
• Change in organization’s legal business name or tax identification number (TIN) -- occurs when the legal name of a practice or facility has changed and/or when its TIN has changed.
• Change in practice status -- occurs when a provider/supplier decides to voluntarily withdraw from the Medicare program for any reason (e.g., retirement).
Other types of “reportable events” include:
• Change in reassignment of benefits -- when a physician adds or voluntarily withdraws his or her reassignment of Medicare benefits through the CMS-855R form.
• Change in banking arrangements or payment information -- occurs when a provider or supplier changes his or her bank, bank account, or other payment application.
Note: This type of event should be reported immediately to the MAC by submitting a new electronic funds transfer (EFT) authorization agreement (i.e., CMS-588).
Providers and suppliers should utilize the internet-based Provider Enrollment, Chain, and Ownership System (PECOS) external link to update their Medicare enrollment record. Registered users may use the system for initial enrollment as well as to change, reactivate, or voluntarily terminate an existing enrollment record.


Address change notification
Q: If a provider/supplier establishes a new practice, opens a new facility, or closes/changes the address of an existing practice/facility, how long does the provider/supplier have to inform Medicare of the “reportable event”? How should the change be reported?

A: Any change in practice or facility location (e.g., establish new location, move existing location, close existing location) address must be reported to the provider/supplier’s Medicare administrative contractor (MAC) no later than 30 days after the “reportable event” occurred.
Providers and suppliers should utilize the internet-based Provider Enrollment, Chain, and Ownership System (PECOS) external link to update their Medicare enrollment record. Registered users may use the system for initial enrollment as well as to change, reactivate, or voluntarily terminate an existing enrollment record.
Access the Provider Enrollment Application Assistance Tool for more help in determining the appropriate enrollment form and documentation for submission. For more information about paper-based enrollment applications, please review Provider/supplier enrollment applications.


Adding a provider to a group
Q: What applications do we complete to add a provider to our group?

A: The CMS-855I may be used to add a provider who is initially enrolling or making changes to that provider’s personal information. The CMS-855R is used to reassign the individual’s benefits to the group. This information can also be captured in internet-based Provider Enrollment, Chain and Ownership System (PECOS). For more information on the paper enrollment forms and internet-based PECOS, please review the page Understanding which CMS-855 form to complete.


Voluntary termination
Q: What should be done when leaving an office, closing a private practice, or retiring?

A: You must notify Medicare when voluntarily terminating an enrollment. Voluntary terminations may include:
• Leaving a practice or organization (terminating a reassignment)
• Closing a private practice
• Retiring
• Moving to another state to render services
• Any situation where you will no longer render and bill services for a practice or organization
This notification must take place using internet-based Provider Enrollment, Chain and Ownership System (PECOS) or by completing the appropriate CMS-855 application.
The direct link for each Medicare provider/supplier enrollment application is shown below:
• CMS 855A for Institutional Providers: https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/cms855a.pdf external pdf file
• CMS 855B for Clinics/Group practices and Certain Other Suppliers: https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/cms855b.pdf external pdf file
• CMS 855I for Physicians and Non-Physician Practitioners: https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/cms855i.pdf external pdf file
• CMS 855R for Reassignment of Medicare Benefits: https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/cms855r.pdf 

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