Legal Review: CMS Implements New Home Health Agency Change of Ownership/Transfer Restrictions on Louisiana Medical News

Legal Review: CMS Implements New Home Health Agency Change of Ownership/Transfer Restrictions

The Medicare Home Health Prospective Payment System regulations for 2010 contain new restrictions for a change or transfer of ownership regarding Home Health Agency (“HHA”).

On December 18, 2009, CMS modified regulation 42 C.F.R. §424.550(c) regarding ownership changes occurring within 36 months after either: (1) the effective date of the provider’s enrollment in Medicare, or (2) the effective date of the last ownership change for the provider. This new regulation is more fully described in CMS Manual System, Pub 100-08 Medicare Program Integrity, Transmittal 318, December 18, 2009. The new restrictions took effect January 1, 2010.

The amended regulation provides:

(1) If an owner of a home health agency sells (including asset sales or stock transfers), transfers or relinquishes ownership of the HHA within 36 months after the effective date of the HHA’s enrollment in Medicare, the provider agreement and Medicare billing privileges do not convey to the new owner. The prospective provider/owner of the HHA must instead:

(i) Enroll in the Medicare program as a new HHA under the provisions of §424.510, and

(ii) Obtain a State survey or an accreditation from an approved accreditation organization.”

There are some inconsistencies between the new regulation and the Transmittal. For example, the Transmittal expands what transfers will be included under the 36-month period rule. The Transmittal defines an “ownership change” to include any of the following transfers:

CHOW
Acquisition/Merger
Consolidation
Change request reporting a 5% or greater ownership change (including stock transfer and asset sale)
Change request reporting a change in partners, regardless of percentages change

Whereas the regulation applies only to circumstances in which an owner of an HHA “sells (including asset sales or stock transfers), transfers or relinquishes ownership of the HHA within 36 months after the effective date of the HHA’s enrollment in Medicare.” (42 C.F.R. §424.550(c). While the Regulation has legal authority, the Transmittal is an indication on how CMS will interpret this new regulation.

If you are in the process of transferring or changing percentages in an HHA the new regulation may affect your transfer. CMS cautions contractors that they should not rely on the projected date of sale listed on the application as verification that the 36-month period restrictions may or may not apply. CMS recommends that contractors should request a copy of all transfer and sale documentation that maybe impacted by the 36-month period restrictions set forth above.

If the transfer date does falls within this 36-month period, as defined above, the contractor will return the application and shall notify the provider in writing that the HHA must:

Enroll as an initial applicant;
Obtain a new state survey or accreditation after it has submitted its initial enrollment application and the contractor has made a recommendation for approval to the state/regional office; and
Sign a new provider agreement as part of the initial enrollment.

Any HHA that has had their Medicare billing privileges deactivated must submit a CMS-855A reactivation application and undergo a State survey or obtain accreditation prior to having privileges reactivated. (42 C.F.R. 424.540(b). However, if the transfer or change occurs more than 36 months after the activation of the HHA provider’s enrollment in Medicare or most recent CHOW, the application may be processed as normal.

CMS has stated that the purpose of this change is to ensure HHAs remain in compliance with the Conditions of Participation located at 42 C.F.R. Part 484. Please see Section 5.5.3, Tie-In Notices, and Section 13.1, CMS or Contractor Issued Deactivations, of the Medicare Program Integrity Manual, Ch. 10- Medicare Provider/Supplier Enrollment for additional information.

Should you have any questions regarding the above referenced regulations, please consult your legal counsel.

This month’s Legal Review content is provided by the legal healthcare specialists of Gachassin Law Firm in Lafayette. Gachassin Law Firm attorneys serve diverse healthcare clients throughout Louisiana and Mississippi, covering the wide range of services needed in today’s competitive healthcare industry. All content © 2010 Gachassin Law Firm and Louisiana Medical News, LLC. Louisiana Medical News makes no warranties either expressed or implied as to the accuracy to the information contained herein. All information provided herein is general in nature and does not constitute specific legal advice for any specific situation.

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