New Owner Refuses to Accept Assignment of the Provider

3210.5 - New Owner Refuses to Accept Assignment of the Provider Agreement (Rev. 1, 05-21-04) 3210.5A - New Owner Refuses to Accept Assignment of Previous Owner’s Provider Agreement (Rev. 1, 05-21-04) A new owner may refuse to accept assignment of the previous owner’s provider agreement, which means that the existing provider agreement terminated effective with the CHOW date. The refusal to accept assignment must be put in writing by the new owner and forwarded to the RO 45 calendar days prior to the CHOW date to allow for the orderly transfer of any beneficiaries that are patients of the provider. The refusal can take the form of a letter initiated by the prospective owner or can be indicated in response to a letter sent to the new owner by the RO or the SA that is designed to document the new owner’s desire to continue program participation. In all cases of refusal to accept assignment, 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. In this situation, there may be a period when the facility is not participating and beneficiaries must have sufficient time and opportunity to make other arrangements 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 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 The RO completes a Form CMS-2007 with the date the agreement is no longer in effect, noting that the termination is due to the new owner’s refusal to accept assignment of the provider agreement. It is the responsibility of a prospective purchaser of a Medicare provider to know that it can refuse to accept assignment of the provider agreement and that it should formally indicate its choice in that regard. If, however, the CHOW goes into effect without a refusal or acceptance of assignment on record, the RO concludes that the agreement has been automatically assigned to the new owner and completes processing of the CHOW. If the new owner refuses to accept assignment after the date the CHOW has taken place, the RO should contact its regional attorney for guidance. If a new owner refuses to accept assignment and also wishes to participate in the Medicare program, the RO first processes the refusal as indicated above and then treat the new owner as it would any new applicant to the program: obtain and process application documents, have the SA perform an initial survey and, if all requirements for participation are met, assign an effective date of participation based upon the applicable regulation. (See 42 CFR 489.13.) The earliest possible effective date for the applicant is the date the RO determines that all Federal requirements are met. The Federal requirements include, in addition to the CoP, enrollment as described in §2005, capitalization (HHAs), and any other special requirements such as the special provisions for psychiatric hospitals at 42 CFR 482.60. The aforementioned requirements are the same regardless of whether the new owner operates a non-accredited facility or is seeking Medicare compliance with the CoP via deemed status. As mentioned above, these requirements include enrollment of the provider in accordance with the instructions in §2005. The Form CMS-855 must be submitted prior to the CHOW date. However, the subsequent survey of the new applicant must be performed (1) after the CHOW, because the provider agreement of the former owner terminates effective with the CHOW date and the new owner must be treated as a new Medicare applicant; and (2) after the FI makes a recommendation to CMS for approval in accordance with the current procedures. If for any reason the accrediting body of the entity seeking deemed status chooses not to conduct or to delay a survey of the new entity, CMS will inform the entity that is will be unable to participate in the Medicare program until a survey is conducted and CMS is assured that the new entity meets all applicable health and safety requirements. In such a circumstance the new applicant may choose to have the SA conduct its survey. In addition to the policies articulated above and in §3210.1.C relating to accredited providers, the following policies apply. Hospitals and Units Excluded from Medicare’s Prospective Payment System (PPS) Accreditation by itself does not determine whether to exclude a hospital or unit from Medicare PPS (see Subpart B of 42 CFR 412). All PPS exclusion determinations must be made by the appropriate CMS RO based on the facts at the time the decision is made. PPS hospitals with such units must also be surveyed by the SA to determine if exclusion requirements are met by the new owner following the CHOW. Rehabilitation Unit If the rehabilitation unit is properly accredited as a rehabilitation program (§§3100- 3112.3), the SA must verify only the requirements for the rehabilitation director at 42 CFR 412.23(b)(5). The FI must make its determination regarding the “75 percent rule” (See 42 CFR 412.23(b)(2)). If the rehabilitation program is not accredited, the rehabilitation unit must be surveyed onsite by the SA for compliance with the requirements at 42 CFR 412.25 and 412.29. Psychiatric Unit The SA must perform an onsite survey to determine if the psychiatric unit complies with the PPS exclusion criteria at 42 CFR 412.25 and 412.27 on or after the effective date of the CHOW. The FI must re-verify that other criteria at Part 412 are met. CHOW of a Hospital within a Hospital The non-assignment of a Medicare provider agreement involving a CHOW of a PPS excluded hospital within another hospital (HWH) may affect the PPS exclusion of the HWH if the contractual agreements between the HWH and the new host hospital have changed. If there has been a change, the HWH will lose its exclusion unless the agreements between the two hospitals are renegotiated with the new owner, and the HWH must submit updated evidence of compliance with the regulation to the RO via the SA. In addition, if the HWH is not in compliance with the CoP, it is subject to a loss of “deemed status” (if accredited) and placed under SA monitoring. It could subsequently be terminated if compliance is not achieved. Also, when a host PPS hospital containing a PPS excluded HWH undergoes a CHOW, the HWH must be notified that it must show CMS that it complies with 42 CFR 412.22(e)(5) with the new provider within 30 calendar days of the CHOW date. Offsite Location Based to Provider that Undergoes a CHOW and Non-Assignment of Provider Agreement In the case of a provider with other providers or entities based to it that undergoes a CHOW with a new owner who chooses not to accept assignment of the current provider agreement, the provider-based status of the other providers or entities ends with the termination of the former owner’s provider agreement. The request for Medicare approval of the new owner must include information related to other providers or entities if the new owner intends for these entities to meet the provider-based criteria found in §2004. In the case of hospitals with multiple components that operate as a single hospital, both §§2024 and 2004 apply. It is important to note that §2024 would be inapplicable to provider-based entities other than hospitals with multiple components that operate as a single hospital. The new owner must once again justify to the SA, FI and CMS that these provider-based entities meet CMS’ provider-based criteria. The accreditation body, and the SA as appropriate, must consider these entities in conducting the survey of the new provider for compliance with the CoP or accreditation standards. Specifically, the RO must ensure that all off-site entities that claim to be provider-based comply with the Medicare CoP, or in the case of accredited hospitals, comply with standards that are at least equivalent to the Medicare CoP. CHOW Involves a Related Organization In situations where the CHOW is an organization related to the former owner (e.g., CHOW from general corporate ownership to subsidiary corporation, limited partnership or other related entity) with assumption of the provider agreement the SA or the RO may wish to include the following paragraph in the notice to the provider if you believe there may be outstanding liabilities of the former owner. “The change of ownership does not release the former owner or successor owner from liabilities resulting from past provider operations. The former owner may be liable for overpayments, penalties and other payments arising from the period it owned the provider. In addition, successor owners have joint and several liability for these debts notwithstanding divestiture of assets by the former owner.” In situations where the new owner fails to notify you of a CHOW timely, treat as an assigned agreement (§3210.5). 3210.5B - Withdrawal After CHOW - Provider (Rev. 1, 05-21-04) If, after a CHOW takes place, the RO receives notice that the new owner of a provider desires to withdraw from the program, the RO consults with the new owner to set a withdrawal date designed to protect the health and safety of program beneficiaries who may be patients of the provider. The RO sets a withdrawal date of up to 6 months beyond the provider’s notice of intent to withdraw. Under these circumstances, the RO processes a complete CHOW notice and a withdrawal. 3210.5C - CHOW and Withdrawal - Supplier (Rev. 1, 05-21-04) If the new owner of a supplier declines to participate, the RO negotiates a withdrawal date that does not disadvantage any program beneficiaries that the supplier may be serving. The RO processes the supplier withdrawal as usual. Expansion of Services