Definition
Provider Enrollment is the formal process required to establish and maintain your practice’s billing privileges with government payers like Medicare and Medicaid. During a sale or merger, this involves a specific “Change of Ownership” procedure to transfer those billing rights to the new owner. This is not an automatic transfer; it is an application and approval process with the Centers for Medicare & Medicaid Services (CMS).
Think of it like selling your car. The new owner cannot legally drive it using your old registration. They must go to the DMV and formally transfer the title into their name. Similarly, the new owner of your practice cannot bill Medicare until CMS officially approves them.
Why This Matters to Healthcare Providers
If you handle this process incorrectly, the practice can face a complete stoppage of Medicare and Medicaid payments after the transaction closes. This creates a significant cash flow gap that can last for months, putting serious financial strain on the new operation. Proper planning before the sale is essential to ensure a smooth transition and uninterrupted revenue.
Example in Healthcare M&A
Scenario: A successful four-physician orthopedic group agrees to be acquired by a larger regional practice management platform.
Application: Well before the closing date, the acquiring platform’s team works with the selling physicians to prepare all necessary CMS-855 enrollment applications. Immediately after the deal closes, they file a “tie-in notice” with their Medicare Administrative Contractor. This action links the newly acquired practice locations to the buyer’s existing, approved Medicare billing number.
Outcome: Because of this proactive preparation, the practice’s billing continues without interruption from day one under the new ownership. The physicians avoid any disruption to their work, and the practice avoids a potentially damaging gap in revenue.
Related Terms
- Change of Ownership (CHOW) – This is the official CMS term for the event that triggers the provider enrollment requirement in an M&A deal.
- Tie-in Notice – A specific filing that allows an existing Medicare provider to link a newly acquired practice to their billing number, preventing payment gaps.
- Credentialing – The separate but parallel process of verifying your qualifications with commercial insurance plans like UnitedHealth, Cigna, and Aetna.
The due diligence process is where many practice sales encounter unexpected challenges. View our Transaction Support Services →
About the SovDoc M&A Glossary
Hand-curated by our deal-makers and analysts, the SovDoc glossary turns complex mergers-and-acquisitions jargon into clear, plain-English definitions.
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Frequently Asked Questions
What is Provider Enrollment in healthcare?
Provider Enrollment is the formal process required to establish and maintain a healthcare practice’s billing privileges with government payers like Medicare and Medicaid. It involves application and approval by the Centers for Medicare & Medicaid Services (CMS) to ensure the practice can bill for services rendered.
Why is Provider Enrollment important during the sale or merger of a healthcare practice?
During a sale or merger, Provider Enrollment is critical because billing privileges do not automatically transfer to the new owner. A specific “Change of Ownership” procedure must be completed to transfer these billing rights. Failing to do so can result in a complete stoppage of Medicare and Medicaid payments, causing significant financial strain.
What is the ‘Change of Ownership’ (CHOW) procedure?
The Change of Ownership (CHOW) is the official CMS term for the event that triggers the provider enrollment requirement during a healthcare practice sale or merger. It is the application and approval process that formally transfers billing rights from the old owner to the new owner.
How can a ‘Tie-in Notice’ help during a healthcare practice acquisition?
A ‘Tie-in Notice’ is a specific filing that allows an existing Medicare provider to link a newly acquired practice to their billing number. This filing prevents payment gaps by enabling continuous billing under the new ownership immediately after the acquisition.
What are some related terms to Provider Enrollment and their meanings?
Related terms include:
– Change of Ownership (CHOW): The CMS process that triggers provider enrollment requirements during a sale or merger.
– Tie-in Notice: A filing to link a newly acquired practice to an existing Medicare billing number.
– Credentialing: The separate process of verifying healthcare providers’ qualifications with commercial insurance plans like UnitedHealth, Cigna, and Aetna.