Major steps involved when change of ownership in practice

 Change of Ownership


When an organization having a provider agreement undergoes a change of ownership in accordance with the principles articulated in 42 CFR Part 489 and §3210 of the State Operations Manual, the agreement with the existing provider is automatically assigned to the new owner so that there is no interruption in service.  However, a new agreement with updated information must subsequently be signed and a Form CMS-855A must be submitted by both the old and new owners.  Only if the provider, under the change of ownership, meets the applicable requirements for approval can the agreement be executed.  For FQHCs, these requirements include PHS approval.

An organization that plans to change ownership must give advance notice of its intention so that a new agreement can be negotiated or so that the public may be given sufficient notice in the event that the new owners do not wish to participate in the Medicare program.  A provider that plans to enter into a lease arrangement (in whole or in part) should also give advance notice of its intention.

A change of ownership occurs, for example, when:

• A sole proprietor transfers title and property to another party;

• In the case of a partnership, there is an addition, removal, or substitution of a partner unless the partners expressly agree otherwise;

• An incorporated organization merges with an incorporated entity that is approved by the program and the latter entity is the surviving corporation.  It also occurs when two or more corporate providers consolidate and the consolidation results in the creation of a new corporate entity;

• An unincorporated organization (a sole proprietorship or partnership) becomes incorporated; or

• The lease of all or part of an entity constitutes a change of ownership of the leased portion.
When an organization’s agreement is terminated, whether by the entity or by CMS, no payment is available to the provider for services it furnishes to Medicare beneficiaries on or after the effective date of the termination.