Advanced Provider & Supplier Enrollment Tips From the Battlefield. Louise Joy, Esq

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1 Advanced Provider & Supplier Enrollment Tips From the Battlefield Louise Joy, Esq Barry D. Alexander, Esq. March 2012 Road Map A review of some basic building blocks Tips to addressing (almost) any enrollment situation Recent case law developments in the last 12 months (the bad news) Pulling it all together and charging into battle. 1

2 Enrollment: Tools of the Trade Provider and Supplier Enrollment Forms the 855 CMS 855A For institutional providers CMS 855B For clinics/group practices, IDTFs, ASCs, and other entities (nonindividuals billing under Part B), not including DMEPOS suppliers CMS 855I For individuals (physicians, NPPs) billing under Part B CMS 855R For reassigning benefits under Part B CMS 855S For DMEPOS suppliers Other Forms 588 Electronic Funds Transfer Agreement 460 Participating provider agreement Pay.gov- CMS Provider Enrollment Form Payment ($505) Enrollment: Tools of the Trade Essential things to know about the 855 forms They can be downloaded from CMS s website On the CMS website Medicare page, select Forms on the left side of the page then check the box for Show only items containing the following word and type 855 in the space provided CMS changes the forms from time to time and the filing date is essential: You must use the right version or enrollment will be delayed or you may lose retroactivity. See Island Nephrology, PC v. CMS (8/1/2011) Enrollment is effective beginning on the date that the contractor receives an 855 that can be processed to conclusion, and generally suppliers (and to a lesser extent providers) are not allowed to bill for services furnished before the enrollment date. Note: Physician organizations may file within thirty (30) days of the start of a new office or new physician member to the group. 2

3 Enrollment: Tools of the Trade Essential things to know about the 855 forms They come with instructions--each particular version has instructions, some of which are peculiar to that version The submitted form must be complete and accurate (this is particularly important as it relates to retroactivity) The enrollment application must be kept current The 855R must be signed by the individual reassigning the benefits, and by the entity (or person) to which (or to whom) the benefits are being reassigned The forms are forms and not regulations. They are not perfect and they do not fit all situations (particularly complex CHOWS) well Enrollment: Tools of the Trade Essential things to know about the 855 forms The 855S must be submitted with a copy of a surety bond in the correct amount (unless the supplier is exempt from the surety bond requirement) The 855S must be submitted with proof of accreditation (for those items that require accreditation) Adverse legal action documentation must be attached There is a backlog in processing the 855 forms Backlog varies by contractor and type of provider/supplier Backlog varies by type of transaction 3

4 Enrollment: Tools of the Trade Provider and Supplier Enrollment Regulations 42 CFR Part 424, Subpart P (the s) -- establishing and maintaining Medicare billing privileges (including rules for denying, revoking and deactivating billing privileges) DMEPOS supplier standards DMEPOS accreditation procedures Part 498 appeals procedures (also ) Manual Provisions Medicare Program Integrity Manual (Pub ) Chapters 10, 15 available at PECOS Guide Getting Started With Internet-based Provider Enrollment, Chain and Ownership System (PECOS) -- available at Enrollment: Tools of the Trade Recent Enrollment Final Rules February 2, 2011 implementing provisions of PPACA on screening requirements, application fees, temporary enrollment moratoria, payment suspensions, and Medicaid terminations of providers and suppliers that have been terminated or that had their billing privileges revoked (76 FR 5682) August 27, 2010 additional DMEPOS supplier standards (75 FR 166) May 5, 2010 implementing provisions of PPACA to require all providers and suppliers that qualify for an NPI to include their NPI on all applications to enroll in the Medicare and Medicaid programs and on all claims for payment submitted under the Medicare and Medicaid programs (75 FR 24437) 4

5 Enrollment: Tools of the Trade Recent Enrollment Final Rules (cont d) January 2, 2009 surety bond requirement for DMEPOS suppliers (74 FR 166) November 19, 2008 established the re-enrollment bar of 1 to 3 years on providers and suppliers that have had their billing privileges revoked and placed limitations on retroactive billing by providers and suppliers (73 FR 69726) June 27, 2008 Appeals of CMS or CMS Contractor Determinations When a Provider or Supplier Fails to Meet the Requirements for Medicare Billing Privileges (73 FR 36448) November 27, 2007 changes to IDTF provisions in (72 FR 66222) Enrollment: Tools of the Trade Recent Enrollment Final Rules (cont d) December 1, 2006 established performance standards for independent diagnostic testing facilities (71 FR 69624) April 21, 2006 Requirements for Providers and Suppliers to Establish and Maintain Medicare Enrollment, implementing section 1866(j)(1)(A) of the Act (71 FR 20754) August 27, 2010 additional standards for DMEPOS suppliers (75 FR 52629) 5

6 Enrollment: The Players MAC Enrollment Staff MAC Enrollment Director/Supervisor CMS Regional Office CMS Baltimore Program Integrity State Agency State Surveyors Contract Surveyors/Site Visits Accreditation Agencies Surety Bond Organizations Top Enrollment Tips* Enrollment = $$. Tend your enrollment directions like a delicate garden. If you don t pay attention to the flowers, they will wilt (and you may not get them back). Enrollment is part law, part art and part mysticism. The enrollment process remains evolutionary and many pieces are not fully defined. Private contractors administer the enrollment process and there is the law and just getting it done. Clients often like to think of enrollment as a collaborative process. They typically handle their own enrollment and only call when they are stuck with deactivation, enrollment denial or termination. Enrollment is a PROGRAM INTEGRITY function of Medicare and Medicaid these days. Educate your clients on the importance of treating the enrollment application like a tax return or an essential corporate filing document: The enrollment applicant bears the burden of proof to demonstrate filing date. Save copies of the application filed; photocopy first-class US Mail filings; save tracking numbers if commercial shipping service is used. Maintain a chron log of all individuals with whom you speak. Attempt to get first and last names and addresses of the contractor representatives. 6

7 Top Enrollment Tips* Watch what cards you play and when you play them. Follow the chain of command to see if you can get the problem fixed at the lowest level first. Get to know (and love) your contractors and CMS staff, be respectful, nice and civil; you ll be dealing with them again. DAB Appeals Read the rules. Read the rules again. File your request for hearing clearly identifying why you are entitled to a hearing (i.e. the adverse decision against you and why you think it was wrong). Mere notice pleading or unorganized documents may get you dismissed. See, Parkside Surgery Institute v. CMS (2/9/2011) Only attach the correspondence/notice of the adverse decision (if it has been provided to you). DO NOT attach anything else File timely (60 days two months) But remember you may file late with show of good cause; however, good cause is discretionary and not appealable. Top Enrollment Tips* Watch out for the consolidation of MACs that result in changes in MACs Jurisdiction 4 (TX, NM, CO, OK, LA) is about to move to Highmark. Loss of contract protest decision was communicated to Trailblazer staff on 3/1/12 Transfers don t tend to go smoothly; documents and files get lost; people may be losing jobs, high level of staff frustration Be even more diligent about follow up during this transition time Adjust expectations; applications will take longer to process. Consider DAB Appeal decisions Provider usually loses if it goes to hearing. (In the 2011 reported DAB decisions summary attached, 48 losses and 7 wins) Review DAB decisions closely (see attached 2011 Summary) Many provider/suppliers clearly were not represented by counsel or, if they were represented, counsel did not understand arguments very well Some cases were lost due to procedural mistakes by providers (not responding to requests for follow up documents or submissions from ALJ) 7

8 Top Enrollment Tips* If you don t know how to do a CHOW, learn the rules or don t do one. For a Part A provider the provide agreement is automatically assumed and assigned unless rejected by the buyer. However, if the buyer rejects the provider agreement, the new provider agreement may not be effective until post-closing completion of the survey and/or accreditation which will lead to prohibited back-billing by the buyer. See 42 CFR (d)(2). See, Mission Regional Hospital Medical Center v. CMS (11/2/2011) Transactional lawyers BEWARE. No more mop and clean-up with side letters for post-closing billing arrangements. For a Part B supplier (such as a physician), the supplier number is not assignable. This means that, in an asset sale, the claims for the physician must be placed on hold pending receipt of the new Medicare group number. Billing under the old group s number could lead to revocation or denial of the new group s number of reassignment. Retroactive billing in a deal depends upon timely filing of enrollment forms. Top Enrollment Tips* Estoppel arguments against Medicare contractors rarely succeed on appeal at the DAB. If a contractor says, "ABC", that contractor representative involved inviting the contractor to respond to you if there is any disagreement on the facts or their answer. Every major change in your business operations (from relocation, to phone numbers, to administrative personnel) should cause you to PAUSE. Do I need to amend my enrollment information with CMS? What are the time frames for amending enrollment information? 90 day deadlines for less critical information 30 days deadlines for more critical information 8

9 Deactivation vs. Revocation Deactivation: Deactivations are typically issued for providers/suppliers that have not submitted claims for more than 12 months, or that have not reported changes timely on an applicable 855 Rules indicate intent to protect the supplier/provider from abuse by others Deactivation can lead to loss of income Concerns about groups operating in more than one payment locality Imposition of deactivation is not appealable administratively But can you appeal directly to court? DAB Request for hearing about reactivation effective date Deactivation vs. Revocation Revocation: Effective retroactively or prospectively Enrollment bar 1-3 years Causes: Failure to revalidate Drive by shooting (practice location not operational) Telephone contact not operational Letters returned to contractor Failure to report suspension of license; and many more... Will lead to increased level of risk for future enrollment action particularly if DMEPOS or IDTF supplier. Consider voluntary termination in lieu of revocation. 9

10 Revocation Repair Kit CAP Request for Reconsideration (RfR) Request for Hearing to Departmental Appeals Board Contacts at CMS Central Office Your Congressional Representative or Senator To CAP or not to CAP Corrective Action Plan or CAPs must be submitted within 30 days (does not = 1 month) For some contractors, provider/supplier must submit a CAP using the form on the contractor website The CAP should identify what was wrong and how it was corrected Submit a new 855 or related form to address problem Effective date might leave a gap unless the CAP can make clear that it was a simple error and/or problem relates to something at the contractor 10

11 To CAP or not to CAP CAPs are discretionary in terms of review and processing. The MAC may not even allow you to file a CAP in some situations. While a CAP may cure a prospective issue, the provider/supplier may still face retroactive claims issues. Carefully consider how you "agree to improve" something without agreeing that you are at fault. For example, IDTF suppliers must have an appropriately qualified medical director. MACs will often attempt to contact the medical director. If the supplier does not have a medical director, it is not clear that the CAP will correct this. There is no appeal of a CAP rejection. If you choose to go the CAP route and miss the deadline for submitting Request for Reconsideration, you may lose the right to appeal. See, e.g. CompRehab Wellness Group, Inc. v. CMS (8/16/2011). Get to know the people processing your CAP and don't lose track of your reconsideration filing deadlines. The "standard" Appeals Process 42 CFR, Part 498 Four steps are: 1. Reconsideration before the MAC/Request for Reconsideration 2. ALJ Hearing 3. DAB Review 4. District Court Unwritten step: Reconsideration or appeal before CMS---either RO or CMS-B. 11

12 Request for Reconsideration 60-day* deadline (not 2 months) Identify error made by contractor Should be corrected retroactively to original date Must be signed by authorized representative or legal representative Supporting documentation cannot be submitted past the reconsideration stage unless good cause for not submitting it earlier. Good cause is highly discretionary. *60-Day Deadline Under 42 CFR , absent good cause, a party must request a hearing within 60 days from the date of receipt from CMS of an adverse determination. Generally, provider/supplier is assumed to have received the notice within five (5) days of the date of the adverse notice letter. In Vista Surgical Center, Inc. v. CMS (2/15/2011), the MAC sent the notification of termination via FED EX and it was received by Vista Surgical on 9/30/10. Accordingly, Vista had until 11/29/10 to file its hearing request. Vista filed the hearing request on 12/3/10. ALJ dismissed the request for hearing because it was not timely filed and Petitioner failed to show good cause. ALJ found that the presumptive 5 day date of receipt does not apply when actual receipt of the notice is established. Here, CMS sent the notification via FED EX and it was received by Petitioner on 9/30/10. 12

13 Request for Hearing Hearing request is submitted to DAB Include copy of MAC letter regarding the adverse action Deadline set by date of decision for request for reconsideration Deadlines may be extended for good cause Request for Hearing DAB sends out prehearing order within +/-10 days after the request is filed CMS Regional Counsel has 30 days to put the case together The CMS attorneys have been reasonable to deal with and settle many of the cases Cases are now handled by ALJ Crow (formerly Board Member Susann) Question about new 1 year claims filing deadline If you win the ability to bill claims that are more than 1 year old, what have you won? Does administrative error doctrine apply? 13

14 Preliminary questions? Case Studies & DAB Decisions Some general themes from the decisions: Bad facts make bad law. Going pro se is.going pro se. The MAC/CMS usually wins (48 to 7 at the DAB in 2011) Good Cause is discretionary and the MAC/CMS usually wins on this point. There is no materiality threshold for 855 reporting. A simple failure to timely report a change of address may lead to revocation. Conversations with contractors are a poor substitute for a good file. Undocumented conversations with contractors might as well have never occurred. First goal should always be to get enrolled or re-enrolled or re-activated when a revocation or deactivation occurs. Second goal, the effective date this can be appealed at a later date. 14

15 Case Study #1: Ownership Information A SNF is updating its enrollment. It is owned directly by a limited liability company, CastleCare, LLC, which in turn has several investors. One of the investors in CastleCare, Last Fidelity, is a general business corporation that holds a 3% investment interest in CastleCare. The instructions for Section 5 of the 855A say: Complete this section with information about all organizations that have 5 percent or more (direct or indirect) ownership interest of, any partnership interest in, and/or managing control of, the provider identified in Section 2 All organizations that have any of the following must be reported in Section 5: 5 percent or more ownership (direct or indirect) of the provider, Managing control of the provider, or a partnership interest in the provider, regardless of the percentage of ownership the partner has. Case Study #2 Revocation PA goes to work for a physician group and completes an 855I to be added to the group. A new PTAN is issued to the PA effective 4/5/2008. On 7/1/2009, the PA's PTAN number is deactivated for lack of billing (all of what the PA was doing was billed "incident to" under the physician's NPI). Neither the group nor the PA received notice of the deactivation until the group tried to bill some charges under the PA in Once the group and PA were able to determine what happened the PA submitted an 855I to reactivate his enrollment on 6/1/2010. The MAC issued a new PTAN number effective 6/1/2010 with ability to submit claims going back to 5/1/2010. What can you do? Contact MAC and ask for a revised date back to the original deactivation. File a request for reconsideration of the date. (do not challenge the imposition of the deactivation). Contact CMS provider enrollment. (issue is just now being recognized as a problem in DAB appeals.) 15

16 Case Study #3 Corrective Action Plan IDTF supplier receives a denial of enrollment based upon MAC's view that an IDTF supplier standard is not met (e.g., physician supervision). IDTF disputes basis of MAC decision. IDTF receives a notice of reconsideration and contractor also agrees to accept a corrective action plan (CAP). IDTF supplier files a CAP with MAC. MAC accepts CAP and, at least orally, indicates that CAP is accepted subject to re-validation of IDTF site. On Day 59, IDTF supplier has not yet received the on-site inspection, but, thinks everything looks good. What should the IDTF supplier do? File the reconsideration request? Contact MAC customer services rep to ask for extension? Contact MAC enrollment supervisor to ask for extension? Contact CMS-Baltimore? All the above? Case Study #4: Part A CHOW Hospital purchased a new hospital campus on 7/1/09 through an asset purchase. Hospital orally contacted MAC to discuss transaction two months before closing. Acquiring Hospital excluded the Medicare Provider number and expressly declined to accept the seller's outstanding liabilities under the existing Medicare provider agreement. Parties filed notice of termination of provider agreement with CMS Regional Office. Within 30 days of closing, new CMS 855A was filed and contacted The Joint Commission to survey the new facility. The new survey was completed successfully on 3/18/2010. The MAC issues a new provider agreement effective 3/18/2010. Lots of screaming starts at your client 16

17 Case Study #4: Part A CHOW Mission Regional Hospital Medical Center v. CMS (11/2/2011) At the time of this transaction, 42 CFR (d)(2) provides "Special Rule: Retroactive effective date. If the provider or supplier meets the requirements of paragraphs (d)(1) and (d)(1)(i) or (d)(1)(ii) of this section, the effective date may be retroactive for up to 1 year to encompass dates on which the provider or supplier furnished, to a Medicare beneficiary, covered services for which it has not been paid." The ALJ found that this provision uses the word "may" which gives CMS discretion to grant a retroactive certification of up to one year and that CMS' longstanding policy not to allow retrospective billing when there was a change in ownership without assumption of the seller's provider agreement was authorized and within CMS' clear discretion. The ALJ further noted that the discretion to provide retroactive payment was eliminated in the amended regulations of August 16, 2010 to reflect CMS' longstanding policy. (42 CFR (c)). So, in a CHOW, if you reject the provider number and cannot immediately fold that entity or operation into an existing provider agreement structure (e.g., as a provider-based satellite campus), you run the risk of denial of Medicare payment. Case Study #5: Part B PECOS New physician joins group and uses web-based PECOS to complete and submit the 855R application on July 1, The information entered and when the MD tries to print the verification and certification page she gets an error message. After several calls to the MAC, she learns that the Web-based PECOS system is down and the application may be caught in system maintenance. On August 15, 2011, the group then resorts to filing a paper-application. When the new PTAN is issued the effective date of billing is set from the date the paperapplication was submitted and received leaving a gap for retroactive billing. Douglas v. CMS (8/3/2011) What are the options? Contact CMS or MAC Enrollment staff? File a request for reconsideration? Appeal to DAB? File a CAP? Bill claims individually under physician's individual PTAN? All of the above? 17

18 Case Study #6: Revocation by Relocation PT Clinic owned by Joan Jet relocates operations to new facility on December 15, The holidays get very busy and Joan Jet leaves the 855 on her desk until after the holidays. The MAC conducts an onsite review of the PT clinic during the 2 nd week of January, but the PT clinic is not there. MAC issues notice of revocation to PT Clinic asserting that the clinic is not operational. The MAC revokes Ms. Jet s billing number for not being operational MAC A gives her a CAP and RfR options Same situation under MAC B, does not give her a CAP option because she was not operational. See, West Miami CMHC, Inc. v. CMS (1/23/2011) & CompRehab Wellness Group, Inc. v. CMS (8/16/2011). Case Study #7: Revocation by Lack of Notice Dr. Bones was suspended by State licensing board on 4/19/09; with help from a knowledgeable medical board attorney, the physician s medical license was reinstated on 5/6/09 with only minimal reporting obligations to the Board. Dr. Bones did not the report suspension to Medicare as adverse action. MAC receives report of suspension and revokes Medicare enrollment and imposes a 1 year bar. Brown v. CMS, CR 2145 (2010) What do you do? 18

19 Case Study #8: Effective Billing Date Sam Shepard has been enrolled in Medicare as a physician since July 2009 and joins Group Practice, effective February 1, Dr. Shepard and Group Practice complete an 855-R. At the same time, Group Practice makes some changes to its 855-B to add Dr. Shepard s new office location. Both applications are mailed on March 1, The MAC does not look at the 855 applications until May 1, The MAC decides that some of the information contained on the 855-B is incomplete and sends the entire package back to Group Practice on May 15, Group Practice adds the missing information and returns the package to the MAC, which receives it on May 31. The MAC determines that the package is complete and gives an effective date of May 31 for the reassignment. When Group practice bills for services furnished by Dr. Shepard for dates of service prior to May 1, the MAC rejects the claims. Case Study #9: Effective Date of Provider Number and CHOW Home Health Agency (HHA) undergoes a CHOW on July 1, 2011 and files 855A seeking approval of the CHOW on July 15, HHA moves to a new office on August 1, On August 15, MAC sends a notice approving the change of ownership and to buyer at the old address. The letter was returned to the MAC. The MAC goes to conduct a review of the HHA site on file (pre-closing). The HHA is found not to be operational at this site and the provider-number revoked. HHA learns of revocation when claims start getting bounced out of MAC and, on August 27, 2011, files the 855A with the new address location. Questions: Can a CAP be filed at this point? In connection with a CHOW, should the provider wait until the CHOW is approved before changing any information on file. See, Health Connect at Home v. CMS (10/31/2011). 19

20 Case Study #10: IDTF CHOW ABC Company buys IDTF supplier in an asset sale transaction. The transaction is an acquisition of 5 separate locations. Prior to closing, the buyer (your client) sits down and determines all necessary required permits and accreditations including a new state licensure requirement for IDTFs. The state law requires that the permit be filed 30 days before closing. On the 15th day following closing, the new 855s are filed. The permits are issued by the state on the 48 th day post-closing. The MAC asks for the permits and, once provided, commences to complete the enrollment and conduct the site visit. During the site visit, the credentials of two technicians are determined not to be in compliance with state law requirements. The company quickly corrects the technician issue. The MAC issues the supplier number with an effective date of 48 days postclosing and the client has a gap in Medicare reimbursement claims. Case Study #11: DME CHOW A DME company acquires the assets of an existing DME company and, within 30 days following closing, applies for the new Part B supplier number. In preparing the 855S filing, the supplier attaches the Bill of Sale and provides all appropriate transaction paperwork signed by the new owner of the business. About two months following the 855S, the new owner then applies for the ABC State DME Permit which is handled by that state s Board of Pharmacy. During this period, and to avoid any disruption in Medicare payment, the Buyer (owner) continues to bill and seek payment under the old supplier s Part B billing number 20

21 A few (interesting) DAB Decisions! Appealing the Effective Date of Enrollment Section 489.3(b) includes as an initial determination (15) The effective date of a Medicare provider agreement or supplier approval. Preamble language states the purpose of the regulation is to make existing appeals procedures available to entities that are dissatisfied with any effective date determination 62 Fed. Reg. at (August 18, 1997) (emphasis supplied) CMS s interpretation of the regulatory history of the regulation is that section 489.3(b)(15) should be understood to restrict appeals to those providers and suppliers subject to survey and certification or accreditation Split in ALJ Decisions DAB, in Eugene Rubach, M.D., DAB CR 2125 (2010), found that issue is appealable A few (interesting) DAB Decisions! Real Party In Interest Some ALJ decisions have held that the entity to which a physician has reassigned benefits cannot bring an appeal concerning unfavorable enrollment action directly related to physician Romeo Nillas, M.D., DAB CR2069 (2010) Victor Alvarez, M.D., DAB CR 2070 Entity, can, however, prosecute the appeal as the representative of the physician or other supplier 21

22 A few (interesting) DAB Decisions! Defective Notice of Revocation Samuel T. Houston, M.D., CR 2071 (2010) -- ALJ finds that notice was defective because it cited only the regulations without explaining how they related to the petitioner, but because 1) the ALJ s review is de novo, 2) CMS s brief provided ample notice of reasons for revocation, and 3) the petitioner was afforded the opportunity to respond, there was no prejudice to the petitioner. Entity with contractual arrangement denied enrollment as an IDTF US Ultrasound, CR 1982 (2010) -- DAB upholds denial of enrollment, because US Ultrasound did not meet definition of supplier. A supplier is an entity that furnishes health care services under Medicare, and here US Ultrasound would contract with another entity that would own the equipment and be responsible for its maintenance and calibration, and would perform the TC and PC of the tests. A few (interesting) DAB Decisions! Revocation for Failure to be Operational E&I Medical Supply Services, Inc., CR 2363 (2011) DAB upholds ALJ s decision that found CMS failed to provide any credible or persuasive evidence supporting its revocation determination. Direct contradiction between the testimony of the supplier s employees (and others in building) who say the employees were present and accounted for and the business operational, and the testimony of the NSC investigator who said that he went to the supplier s place of business on 6 separate occasions during posted business hours and found the office to be closed ALJ found the NSC investigator s testimony to be not credible Affirmed at DAB! 22

23 A few (interesting) DAB Decisions! Proper Notification to CMS or contractor of Adverse Legal Action (or change in location or change of ownership) is the proper CMS 855 Form. Under 42 CFR (d), physicians are required to report to their Medicare contractor any final adverse action, change of ownership, or change in practice location within 30 days. The Medicare Program Integrity Manual, Chapter 10, Section 7.1 provides "unless otherwise specified in this manual, if an enrolled provider is adding, deleting, or changing information under its existing tax identification number, it must report this change using the applicable CMS-855 form. Letterhead is not permitted." In Laudon v. CMS (1/13/11), a chiropractor alleges that his office notified the Medicare contractor of his license suspension via letter on 12/31/09. Evidence of this alleged notification letter was not considered for several reasons ("new evidence" without showing of good cause and lacking credibility) but ALJ stated that even if the evidence was admissible, letter notification of an adverse action is insufficient and such information is required to be reported on the specific CMS form. HHA 36-Month Rule Where there is a CHOW of a provider of services, the new owner assumes the provider agreement of the old owner (unless the new owner expressly declines to do so) However, there is a special rule for certain changes of ownership in HHAs that take place within 36 months after the effective date of the HHA s enrollment in Medicare Where the rule applies, the HHA must enroll as a new provider and must be re-surveyed or re-accredited prior to enrollment in Medicare. Rule has its genesis in CMS concerns with owners who are only interested in flipping the HHA, instead of operating the HHA. 23

24 HHA 36-Month Rule CY 2011 HHA PPS rule provides that the 36-Month Rule is triggered where there is a change in majority ownership change in majority ownership does not include an indirect change in ownership (supposed to be in text, but in preamble only) CY 2010 rule provided that 36-Month Rule was applicable where there was a change in ownership change in majority ownership or change in ownership is not synonymous with a CHOW (as defined in ) includes the acquisition of a majority ownership (more than 50%) in an HHA through the cumulative effect of asset sales, stock transfers, consolidations, or mergers during the 36-month period after Medicare billing privileges are conveyed or the 36- month period following the HHA s most recent change in majority ownership. HHA 36-Month Rule 4 Exceptions to Rule ( (b)(2)) 1. HHA submitted two consecutive years of full cost reports low utilization or no utilization cost reports do not qualify as full cost reports 2. HHA's parent company is undergoing an internal corporate restructuring, such as a merger or consolidation 3. Owners of an existing HHA are changing the HHA's existing business structure and the owners stay the same e.g. from corp to partnership; from LLC to corp; from LLP to LLC 4. An individual owner of an HHA dies 24

25 HHA 36-Month Rule Case Study #12 Hypotheticals for considering whether there is an indirect change of ownership or internal corporate restructuring: 1. Parent A owns Intermediate Entity I which owns HHAs P1 and P2. Parent sells 51% of its stock to outside entity O. 2. Parent A owns Intermediate Entity I which owns HHAs P1 and P2. Parent splits into two Divisions, one of which owns Intermediate Entity I. 3. Parent A owns Intermediate Entity I which owns HHAs P1 and P2. New entities S1 and S2 are created, which are owned by Intermediate Entity. S1 owns HHA P1 and S2 owns HHA P2. Section 6501 of PPACA Section 6501 of PPACA provides that a State is required to terminate a person or entity from participation in Medicaid if the person or entity has been terminated from Medicare or another State s Medicaid program Even before PPACA, SNF/NF that is terminated from Medicare is terminated under Medicaid ( (d)) Section 6502 was repealed in the Medicare and Medicaid Extenders Act of 2010, H.R (Dec. 15, 2010) Would have meant that if one component is terminated from Medicare, all related components of an organization would be terminated from Medicare and all State Medicaid programs 25