Medicare Provider Change of Ownership: Forms & Billing Procedures (CMS-855A Guide)

Understanding a Healthcare Provider Change of Ownership with CMS

Navigating a Medicare provider change of ownership is a critical process that requires meticulous attention to detail to ensure continuous service and uninterrupted payments. When a healthcare organization with a provider agreement undergoes a change of ownership, as detailed in 42 CFR Part 489 and §3210 of the State Operations Manual, the existing provider agreement is automatically assigned to the new owner. This critical step prevents service interruption for beneficiaries. However, for the Medicare provider agreement transfer process to be fully completed, a new agreement with updated information must be signed, and a Form CMS-855A must be submitted by both the old and new owners. The agreement can only be executed if the provider, under the new ownership, meets all applicable requirements for approval. For Federally Qualified Health Centers (FQHCs), these requirements specifically include Public Health Service (PHS) approval, which ensures compliance with federal health service standards (more information can often be found on HRSA’s official website).

Advance Notice Requirements for Ownership Changes

An organization planning a change of ownership must provide advance notice of its intention. This notification is crucial for enabling the Centers for Medicare & Medicaid Services (CMS) and your Medicare Administrative Contractor (MAC) to negotiate a new agreement or to provide sufficient public notice if the new owners do not wish to participate in the Medicare program. Typically, providers should aim to give notice at least 90 days prior to the anticipated change to allow for a smooth transition and prevent any potential delays in the provider enrollment process. Similarly, a provider intending to enter into a lease arrangement (in whole or in part) should also give advance notice of this intention.

Common Change of Ownership Scenarios

A change of ownership (CHOW) can occur in various forms, each with specific implications for the provider agreement and enrollment process:

• Sole Proprietor Transfer: This occurs when a sole proprietor transfers title and property to another party. The new owner must apply for a new provider agreement, as the agreement is tied to the individual’s unique identity.
• Partnership Changes: In a partnership, a change of ownership is triggered by the addition, removal, or substitution of a partner unless the partners have an explicit agreement stating otherwise. Such changes necessitate an update to the provider enrollment records to reflect the new partnership structure.
• Corporate Mergers or Consolidations: This scenario happens when an incorporated organization merges with an incorporated entity approved by the program, and the latter entity is the surviving corporation. It also occurs when two or more corporate providers consolidate, resulting in the creation of a new corporate entity. These complex changes require significant documentation to transfer the existing provider agreements or establish new ones.
• Unincorporated to Incorporated: When an unincorporated organization (like a sole proprietorship or partnership) becomes incorporated, it represents a change in legal structure that requires a new Medicare provider agreement and updated enrollment.
• Lease Arrangements: The lease of all or part of an entity can constitute a change of ownership for the leased portion. This means the lessee often assumes responsibility for the Medicare agreement for the leased facility or services, requiring new enrollment paperwork.

It is crucial to understand that if an organization’s agreement is terminated, whether voluntarily by the entity or by CMS, no payment will be available to the provider for services furnished to Medicare beneficiaries on or after the effective date of termination. Ensuring continuous compliance during the Medicare provider agreement transfer process is paramount to avoid payment disruptions.

Step-by-Step Guide for Submitting Form CMS-855A

Submitting Form CMS-855A is a critical part of the Medicare provider change of ownership process. Follow this checklist to ensure a correct and timely submission:

1. Gather Required Documentation: Collect all necessary legal documents, corporate agreements, financial statements, and licensure information for both the old and new owners.
2. Complete Sections for Both Parties: Ensure that both the outgoing and incoming owners complete their respective sections of the CMS-855A form accurately. Both parties are required to submit this form.
3. Provide Accurate Ownership Details: Clearly outline the ownership structure, including any managing employees, officers, directors, and partners, as well as their respective percentages of ownership.
4. Address Financial Relationships: Disclose any financial relationships between the provider and other entities or individuals, as required by CMS.
5. Specify Reason for Submission: Clearly indicate that the submission is for a “Change of Ownership” to streamline processing.
6. Attach Supporting Documents: Include all required attachments, such as articles of incorporation, partnership agreements, and proof of legal transfer. Missing documentation is a common pitfall.
7. Review for Accuracy and Completeness: Before submission, thoroughly review the entire form and all attachments for any errors, omissions, or inconsistencies. Incomplete applications are often rejected, causing significant delays.
8. Submit to Your MAC: Send the completed CMS-855A and all supporting documentation to your designated Medicare Administrative Contractor (MAC). Confirm their preferred submission method (e.g., mail, online portal).
9. Retain Copies: Keep complete copies of the submitted application and all supporting documents for your records.

Timely and accurate submission is vital for smooth provider enrollment and to prevent interruptions in Medicare billing privileges.

Billing Guidelines for Ownership Changes: Understanding Split Billing

A complex but crucial aspect of facility ownership changes, particularly for inpatient stays, is the split billing process. When a change in facility ownership occurs during a beneficiary’s inpatient stay, two separate claims must be submitted – one by the original owner and one by the new owner. This ensures proper reimbursement for services provided by each entity. The first owner is entitled to payment for services rendered up to and including the day of transfer. Understanding these billing guidelines for ownership changes is essential:

• First Claim Submission: The original owner’s claim must clearly indicate the appropriate patient status code and a “through” date that corresponds to the last day of original ownership.
• Second Claim Submission: The new owner’s claim must show the “from” date as the very first day of the new ownership.
• Consistent Admission Date: Crucially, the same admission date must be used on both claims to link the continuous inpatient stay.
• PACER Number Usage: If a PACER (Provider and Client Eligibility Review) number was required for the initial admission, both claims must utilize this identical PACER number.
• Remarks Section Note: The phrase “Change in ownership” must be explicitly stated in the remarks section of the second claim (submitted by the new owner) to alert CMS to the ownership transition.

Proper execution of split billing procedures is vital to avoid payment interruptions and ensure accurate reimbursement during the transition.

NPI Registration and Billing for Facilities Under New CMS Ownership

Following a facility change of ownership, NPI registration for new facility owners is a mandatory step. The facility must register the National Provider Identifier (NPI) for the new owner through the online CHAMPS Provider Enrollment (PE) subsystem. If the provider’s tax identification number (TIN) remains unchanged, the NPI can be updated through the CHAMPS PE maintenance function. However, if the change involves a new TIN, the provider must complete an entirely new enrollment application. (For comprehensive enrollment information, please refer to the Provider Enrollment Section of the General Information for Providers Chapter).

When a facility changes ownership in the middle of a month, and a beneficiary has had continuous residency at the facility for that entire month, a specific billing protocol applies. The facility must submit a claim using the old provider NPI number for the first part of the month and a separate claim for the second part of the month using the new provider NPI number. This process of submitting two facilities and two claims in a month should also be followed for beneficiaries with patient-pay amounts. (For more details, refer to the Patient-Pay Amount subsection).

Ensuring Compliance During a Healthcare Provider Change of Ownership

Meeting all compliance requirements during a healthcare provider change of ownership is paramount to prevent payment interruptions, audits, or potential penalties from CMS. New facility owners must diligently ensure adherence to all federal and state regulations, including those pertaining to licensure, certification, quality of care, and billing integrity. This involves:

• Due Diligence: Thoroughly review the compliance history of the acquired entity.
• Policy Updates: Update all internal policies and procedures to reflect new ownership and any changes in operational structure or regulatory requirements.
• Staff Training: Ensure all staff are trained on new or revised compliance protocols, especially concerning billing and documentation.
• Continuous Monitoring: Establish robust systems for ongoing compliance monitoring and auditing.
• Reporting Changes: Promptly report any significant operational or structural changes to relevant regulatory bodies, including CMS and MACs, beyond the initial CMS-855A submission.

Proactive compliance measures are critical for a successful transition and sustained participation in the Medicare program.

Frequently Asked Questions (FAQs) about CMS-855A and Change of Ownership

What is Form CMS-855A used for?

Form CMS-855A, also known as the Medicare Enrollment Application for Institutional Providers, is used by institutional providers (such as hospitals, skilled nursing facilities, home health agencies, hospices, and federally qualified health centers) to enroll in Medicare, revalidate their enrollment, make changes to their enrollment, or report a change of ownership.

Who needs to submit CMS-855A during a change of ownership?

Both the old (outgoing) owner and the new (incoming) owner are required to submit Form CMS-855A when a change of ownership occurs. This ensures a clear transfer of the Medicare provider agreement and updated information for the new entity.

What is the ‘advance notice’ requirement for a change of ownership?

Providers planning a change of ownership must give advance notice to CMS and their Medicare Administrative Contractor (MAC). This is typically required at least 90 days prior to the change to allow for proper negotiation of new agreements and to ensure public notice if the new owners do not wish to participate in Medicare.

How does a change of ownership affect NPI registration?

A change of ownership requires updating NPI registration. If the Tax Identification Number (TIN) remains the same, the NPI can be updated via the CHAMPS Provider Enrollment maintenance function. If there is a new TIN, a complete new enrollment application is required for the new owner.

What is ‘split billing’ in the context of a change of ownership?

Split billing occurs when a change of ownership happens during a beneficiary’s inpatient stay. Two separate claims are submitted: one by the original owner for services up to the transfer date, and one by the new owner for services from the date of new ownership forward. Both claims use the same admission date and PACER number (if applicable), and the new owner’s claim must state “Change in ownership” in the remarks.

Are there specific FQHC change of ownership requirements?

Yes, for Federally Qualified Health Centers (FQHCs), specific requirements for change of ownership include obtaining Public Health Service (PHS) approval, in addition to meeting general CMS requirements. This ensures continued compliance with federal standards for FQHC operations.