A Thumbnail Sketch on Enrollment, Licensure, and CON’s
Remember that a CHOW primarily impacts: (1) Medicare enrollment, (2) Medicaid enrollment, (3) state licensure, and (4) the Certificate of Need (“CON”). In our last blog, we discussed why CHOWS are important and what can happen if they aren’t handled properly. Today, we go through the four major areas that are affected by a CHOW.
Medicare Enrollment. One of the most important payment streams for providers is Medicare, the federal government program for reimbursing healthcare services for the elderly. To maintain active enrollment in the Medicare program, CMS requires Providers to report ownership changes. Failure to do so can result in penalties post-closing and a revocation of Medicare billing privileges.
Medicare payment is accomplished through provider agreements between the Provider and the federal government (the Centers for Medicare and Medicaid Services, or “CMS”), and whether or not a CHOW has occurred can significantly affect the Medicare billing processes for the new owner and prior owner in the transaction.
- Medicaid Enrollment. Similar to Medicare enrollment, many Providers also get paid through Medicaid, the joint federal-state program for reimbursing healthcare services to the underprivileged. Generally, payment is handled under provider agreements similar to Medicare, but with a state agency rather than federal. Failure to properly handle a CHOW can jeopardize the Medicaid payment stream.
- Licensure. Most Providers are required to be licensed in their respective states. Licensure by state healthcare agencies is the primary regulatory scheme under which many Providers operate. Licensure generally includes that the Provider pass regular surveys/inspections and meet certain minimum ongoing standards for operation. A CHOW is an event that the state licensing authorities take seriously, and failure to get approval of a CHOW can result in loss of licensure, which would create an interruption in the Provider’s ability to provide services.
- Certificate of Need. Some states, though not all, require the award of a Certificate of Need (“CON”) in order for a healthcare facility to be built and in some cases, to continue to operate. CON programs are designed to allocate optimally all healthcare resources across an entire state, preventing overcrowding and undercrowding that otherwise could happen due to economic opportunities. Often, a CON is completed (and closed) before an ownership change takes place. However, if the CON remains in place, the CHOW may have to be approved to insure that the CON is unaffected; in addition, even with a completed CON, sometimes a CHOW can be an event that creates the need for a new or modified CON.