Reporting Change of Ownership (CHOW)

30.7 - Reporting Change of Ownership (CHOW) (Rev. 1502; Issued: 05-09-08; Effective/Implementation Date: 06-09-08) Pursuant to 42 CFR §414.422(d)(2), CMS may award a contract to an entity that merges with, or acquires, the contract supplier if (1) the successor entity meets all requirements applicable to contract suppliers for the competitive bidding program(s) to which the contract supplier’s contract applies; and (2) the successor entity submits to CMS the documentation described in 42 CFR §§414.414(b)-(d) if that documentation has not previously been submitted by the successor entity or the contract supplier that is being acquired, or is no longer current. The documentation required by 42 CFR §§414.414(b)-(d) is necessary to substantiate compliance with basic eligibility requirements, quality standards, accreditation requirements and financial standards. The successor entity that is acquiring the assets of the contract supplier must also submit to CMS, at least 30 calendar days before the anticipated effective date of the change of ownership, an executed novation agreement acceptable to CMS. The novation agreement must state that the successor entity will assume all obligations under the contract. If a new entity will be formed as a result of the merger or acquisition, the existing contract supplier must submit to CMS for review, at least 30 calendar days before the anticipated effective date of the change of ownership, its final draft of a novation agreement stating that the new entity will assume all obligations under the contract. With the final draft novation agreement, the existing contract supplier must submit the documentation described in 42 CFR 414.414(b)-(d) if the information previously submitted by the contract supplier is no longer current. The new entity must also submit to CMS, within 30 calendar days after the effective date of the change of ownership, an executed novation agreement acceptable to CMS stating that it will assume all obligations under the contract. The new entity must meet all requirements applicable to contract suppliers for the applicable competitive bidding program. The following chart illustrates the CHOW requirements needed to remain a contract supplier described above. Entity Requirement Number of Days to Meet Requirement Contract Supplier Only The existing contract supplier must notify CMS if it is negotiating a CHOW. 60 calendar days before the anticipated date of the change. If a new entity will be formed as a result of the merger or acquisition, the existing contract supplier must submit to CMS, its final draft of a novation agreement as described in 414.422(d)(2)(iii). At least 30 calendar days before the anticipated date of the CHOW. Successor Entity or New Entity The successor entity or new entity must submit to CMS the documentation in 414.414(b)-(d), if not submitted previously by the successor or the contract supplier or if no longer current. Duplicates of previously submitted information need not be submitted if that information is still current. Within 30 calendar days prior to the anticipated effective date of the CHOW. Entity Requirement Number of Days to Meet Requirement Successor Entity Only The successor entity that is acquiring the assets of the existing contract supplier must submit to CMS, a signed novation agreement acceptable to CMS, stating that it will assume all obligations under the contract. At least 30 calendar days before the anticipated effective date of the change of ownership. New Entity Only The new entity must submit to CMS an executed novation agreement acceptable to CMS. Within 30 calendar days after the effective date of the CHOW. NOTE: Successor and new entities must meet all requirements applicable to contract suppliers for the applicable competitive bidding program. Any communication with CMS regarding the change of ownership must be in writing and mailed to the appropriate address designated in the contract.