Definition
A Change of Ownership (CHOW) is the formal process required by the Centers for Medicare & Medicaid Services (CMS) to transfer a healthcare practice’s Medicare provider agreement and billing privileges to a new owner. You must typically report this change to CMS within 30 days of the sale to ensure the new entity can bill for services without interruption.
Why This Matters to Healthcare Providers
Think of the CHOW process like transferring utility services when you sell a house. If you don’t coordinate the transfer correctly, the power gets shut off. A mishandled CHOW filing can switch off your practice’s Medicare revenue stream, creating a major cash flow gap for the buyer right after the transaction closes.
Example in Healthcare M&A
Scenario: A four-physician gastroenterology group is acquired by a regional health system. The definitive agreement is signed, and the deal closes on June 1st. The practice’s management team, focused on clinical integration, submits the CMS-855B form for the CHOW in mid-July.
Application: Because the team missed the 30-day filing deadline, CMS rejected their CHOW application. They were required to re-apply, a process that created further delays.
Outcome: The practice’s Medicare billing privileges were suspended. For nearly three months, the new owner received no payments for services provided to Medicare patients. This caused a significant, unplanned financial strain and complicated the post-acquisition integration.
Related Terms
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Frequently Asked Questions
What is a Change of Ownership (CHOW) in healthcare?
A Change of Ownership (CHOW) is the formal process required by the Centers for Medicare & Medicaid Services (CMS) to transfer a healthcare practice’s Medicare provider agreement and billing privileges to a new owner.
Why is the CHOW process important for healthcare providers?
The CHOW process is important because if not coordinated correctly, it can result in the suspension of the practice’s Medicare revenue stream, causing significant cash flow gaps for the new owner after the transaction closes.
What is the deadline for reporting a Change of Ownership to CMS?
The change must typically be reported to CMS within 30 days of the sale to ensure the new entity can bill for services without interruption.
What can happen if the CHOW filing deadline is missed?
Missing the 30-day CHOW filing deadline can lead to CMS rejecting the application, resulting in suspended Medicare billing privileges and no payments for services rendered to Medicare patients, causing financial strain.
Can you provide an example of a CHOW issue in a healthcare acquisition?
In one example, a gastroenterology group was acquired by a health system, but their CHOW application was submitted late and rejected by CMS. This suspension of billing privileges lasted nearly three months, causing significant financial challenges and temporary disruption in Medicare payments after the acquisition.