Healthcare matters remained highly relevant throughout the month of September, as comments were released on important home health regulations, as a lawsuit appeared likely to move forward, and as lawmakers and the President marked the six-month anniversary of the new healthcare reform law.


As we reported to you in our August 9 update (please visit to view this and other past updates), comments associated with the Centers for Medicare and Medicaid Services’ (CMS’s) proposed rule for the Medicare Home Health Prospective Payment System (HH PPS) Rate Update for Calendar Year 2011 were due to the agency by September 14. This proposed rule promulgated changes to the so-called “36-month rule” for home health agencies (HHAs) that went into effect in January 2010.

Under the 36-month rule, the provider agreement and Medicare billing privileges do not convey to a new owner if an HHA owner sells, transfers or relinquishes ownership within 36 months after the effective date of Medicare enrollment. Exemptions were proposed in July 2010 in response to concerns that the rule would have the unintended consequence of harming the business of legitimate HHAs and potentially affecting financing to the industry. Such exemptions included public companies, changes in ownership resulting from changes in business structure or death, and internal corporate restructuring.

Thirty-two comment letters have been publicly posted, many of which address the ongoing concerns surrounding the 36-month rule and the proposed exemptions. A sampling of comments included:

  • Former CMS Acting Administrator Leslie Norwalk cited financing concerns, stating: “Ironically, CMS’s proposal on the change of ownership requirements jeopardizes the ability of even long-established HHAs to gain access to capital. As the preamble makes clear, credit is critical to a functioning business, whether that business is new or established…The impact of limiting an HHA’s access to capital will in turn limit job creation, investments in technology, and Medicare beneficiaries’ access to quality care, especially in rural areas, where more capital is needed for expansion. This significant unintended consequence does nothing to limit the core issue of ‘flipping’ or ‘certificate mills’ while severely restricting access to capital for legitimate HHAs.”
  • The New York State Association of Health Care Providers, Inc. recommended that “CMS should rescind the current 36-month rule and establish a technical advisory committee with experts from home care and the finance sector to establish guidelines that will ensure that patient care remains a top priority for existing and new home care agencies.”
  • A coalition of HHAs said that it is “very important that the rule not apply to HHAs that have submitted cost reports to Medicare for more than 36 months.”
  • Catholic Health East stated, “Why single-out the publicly-traded companies for exception, and leave non-profit organizations (i.e. voluntary non-profit – church) at a disadvantage in acquiring an HHA within the first thirty-six months of Medicare participation.”
  • The Home Care Association of New York State recommended that “the existing 36-month rule and any revisions be applied prospectively only. Specifically, no HHA that is currently Medicare enrolled should be subject to the rule in the event of any implicated ownership change as they entered into Medicare without a restriction on the sale of the HHA other than those restrictions existing at that time.”