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. 

  1. 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. 
  2. 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.
  3. 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. 
  4. 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.