Change of Ownership (CHOW) is a process that must be followed to transfer the ownership from one party to another.

 

Congregate Living Health Facility Change of Ownership (CHOW) Process

This document is meant to be an aid for CAHSAH members to use to help them during the

Change of Ownership (CHOW) process. It should supplement the information, forms, and

paperwork you receive from your local Department of Health Services (DHS) district licensing

and certification office. 

Remember: even though there are certain forms and regulations that

mandate the CHOW, that this process is dynamic and fluid and is subject to delays because of

workload, individual differences between staff in your local DHS district office, and filling out

forms incorrectly. Make sure to start with ample time to avoid surprises in your planning process.

Helpful Tips on the CHOW:

· You should make sure that the organization you are going to purchase has a licensed

Congregate Living Health Facility in good standing and that there are no conditions still unaddressed from a previous

survey before you purchase (or at least know that they don’t before you purchase). 

Why?

Because when you buy Congregate Living Health Facility, you inherit that facility's history,

record and provider number. Their history becomes your history regardless if you have only

owned them for a short time.

· You do have the option of terminating the provider number and establishing a new one, but

this could take extra three months of processing time. When you terminate and take on a new

provider number, you can not bill while you are waiting for the new provider number.

You can also not bill retroactively. Many providers think they can bill while they are waiting

for a new provider number, and they are often surprised when their claims get denied. This

should be taken into consideration when you are making this decision. Call your DHS district

office and ask about this issue.

· DHS has indicated that, if you are taking on the provider number of the Congregate Living

Health Facility you are purchasing, you can start billing through a Management Agreement

between the borrower and seller. Make sure to run this by your district office before you start

billing to make sure that it is acceptable. There are risks involved in not waiting for the

CHOW to be approved.

· Always remember to keep a copy of all forms you fill out. Sometimes DHS and CMS lose

documents and it is very handy and time-saving to have copies of these documents.

· If you have any questions regarding change of ownership paperwork and requirements, you

should work with your DHS, Licensing and Certification Office. The phone number and

information for your local district DHS L&C office can be found here:

http://www.dhs.ca.gov/lnc/org/default.htm. 

You should get on a first name basis with the

analyst who is processing your Change of Ownership paperwork. This DHS L&C staff person

will be the most important person in the process and can assist you with all your questions.

Additionally, attached to this document is a copy of a Change of Ownership Letter that you

can use to understand what DHS will ask from you. We recommend you start a few months

before you know that you need to start billing, so you can have all your paperwork approved.

· Time Frame: This entire process from start to finish, generally takes 60-90 days (assuming

you submit paperwork for FI, and DHS at the same time and you submit your paper work

correctly.)

What is a Change of Ownership?

State regulations require that you file a change of ownership, per Title 22, Section 74667, in the

following circumstances:

y

CHOW and a CLHF

 

(a) Changes Requiring New Application. An application shall be submitted to the Department

within 10 working days whenever a change of ownership occurs. A change of ownership shall

be deemed to have occurred where, among other things, when compared with the information

contained in the last approved license application of the licensee, there has occurred a transfer

of 50 percent or more of the issued stock of a corporate licensee, a transfer of 50 percent or

more of the assets of the licensee, a change in partners or partnership interests of 50 percent or

greater in terms of capital or share of profits, or relinquishment by the licensee of the

management of the Congregate Living Health Facility

(b) Changes Requiring Written Notice. The licensee shall, within 10 days, notify the Department

in writing of the following:

(1) Change of name of Congregate Living Health Facility;

(2) Change of location and/or address of Congregate Living Health Facility;

(3) Change in the licensing information required by subsection (a) of Section 74661.

(4) Change of the mailing address of the licensee;

(5) Change in the principal officer (chairman, president, general manager) of the governing

board. Such written notice shall include the name and principal business address of each

new principal officer;

(6) Change of the administrator including the name and mailing address of the administrator,

the date the administration assumed office and a brief description of qualifications and

background of the administrator.

(7) Change of Director of Patient Care Services including the name and mailing address of

the Director of Patient Care Services, the date the Director of Patient Care Services

assumed office and a brief description of qualifications and background of the Director of

Patient Care Services Administrator, the date the administration assumed office, and a brief

description of qualifications and background of the administrator.

(8) Addition or deletion of services.

Change of Ownership Process:

To do a Change of Ownership there are three entities involved: The Fiscal Intermediary (FI),

Department of Health Services (DHS), Licensing and Certification, District Office (the one with

where your parent Congregate Living Health Facility is located), and the Centers for Medicare

and Medicaid Services

(CMS).

I. Fiscal Intermediary (FI) Involvement:

* Fill out the 855A Application, the Application for Health Care Providers that will Bill

Medicare Fiscal Intermediaries, if you plan on billing for Medicare services. Read the

instructions, it specifically states what to do if you are doing a CHOW. The FI just checks it to

make sure that the financials of the corporation are sound and accurate and reports this to both

CMS and DHS. It depends on the FI. Some FIs send a copy to both to CMS and DHS District

Office. Another FIs send it just to DHS and DHS sends to CMS. CMS will need this approval

before they can process the CHOW. Once the FI approves or denies the CHOW, they are no

longer involved in the process. Time frame: up to 60 days depending on workload. You should

receive the form from your DHS L&C office. However, if you need it, the 855 A form can be

found here: http://www.cms.hhs.gov/providers/enrollment/forms/

 

II. DHS Involvement

You should write to the DHS and request the CHOW application packet. We strongly recommend

that you work through the DHS office, so you can be on record as starting the CHOW process

and get all the official forms and paperwork from your district DHS L&C office, as well as

establish contact with a DHS employee. However, if you want to download or review copies of

these forms, you can by going to http://www.dhs.ca.gov/publications/forms/L&C/B4.htm. (Note:

at this time, Congregate Living Health Facility forms are combined with nursing home forms.)

The attached sample letter from DHS L&C Alameda is an example of a letter you would receive

with all of the forms and information attached. Call (916) 641-5795 and ask for the DHS example

letter in hot file L6.

Much like a new Congregate Living Health Facility, the following are the forms required for a

CHOW:

HS 200 – Application for a facility license;

HS 215 – Applicant Information;

HS 308 – Designation of Administrative Responsibility

HS 309 – Administrative Organization

A check for the license fee payable to the Department of Health Services

HS 310 – Date of Ownership Change

HS 690 – Assurance of Compliance

MC 803 – Medi-Cal Provider Data Form

HCFA 1513 – Ownership and Control Interest Disclosure Statement

HCFA 1561 – Health Insurance Benefits Agreement (two copies)

HCFA 1572 – Copy of Federal Survey Report Form (retain for your information)

HCFA 2572 – Statement of Financial Solvency*

DHS 1051 Civil Rights Compliance Review

HS 413 – Intermediary Preference*

Additionally:

* If a nonprofit organization, a copy of IRS Letter of Determination of Nonprofit

Status;

* A copy of State Franchise Tax Board Letter of Determination of Nonprofit status;

* If the owner is a corporation, a copy of the Articles of Incorporation as filed with

the Secretary of State, State of California, or if the owner is a partnership, a signed

copy of the Partnership Agreement;

* Evidence of possession of the property (lease, rental agreement, deed, bill of sale)

* Notice – Relative to Effective Date of Provider Agreement;

* Office of Civil Rights Letter;

* A copy of any management agreement(s) signed and dated by both parties;

* A copy of instructions on the Implementation of Patient Self-Determination

Provision of OBRA 90 (No need to return);

* CMS 855A Medicare General Enrollment-Health Care Provider/Supplier

Application – Mail original to the intermediary (as explained above) and provide

DHS with a copy.

* Evidence of adequate capitalization to fund the business for three (3) months

without Medicare/Medi-Cal reimbursement. Initial HHA’s are required to have a

capitalization plan that satisfies the federal requirement (90 days) as referenced in

the July 31, 1998 Federal Register, Volume #63, Number 147.

 

For a CHOW, You must also do the following:

1. A letter from the current licensee to the Department with a copy of the letter to the new

licensee stating that the present license will be relinquished to the Department for

cancellation upon issuance of a new license.

2. A letter from the new licensee to the Department stating where stored patient medical

records will be maintained, and that they will be made available to the previous licensee.

3. A copy of any management agreements signed and dated by both parties.

DHS Recommendation Process: Once you submit the paperwork to DHS, then they will review

and make a recommendation and forward their recommendation to CMS regarding the CHOW.

CMS, more than likely, will approve whatever DHS recommends. DHS indicated that if they

have a lot of concerns about the Congregate Living Health Facility, they will also do a change of

ownership survey. Time Frame: Depends on the workload in each district office. It is best to call

DHS and ask them how long it would take them to process your CHOW.

III. CMS Involvement – Final Approval of the CHOW

Generally, per DHS, CMS doesn’t care about the change of ownership and usually accepts the DHS

recommendation. CMS tends to be more concerned with changes of address rather than

ownership. However, CMS does make the final determination regarding the CHOW and will

send an effective date of the change of ownership along with a contact letter to the Congregate

Living Health Facility notifying the Congregate Living Health Facility that they have been

approved or denied.

If you also will bill for Medi-Cal services, then CMS will also send a transmittal (in-house form)

to the State DHS, Provider Certification Office (in Sacramento), to the Provider Enrollment

Branch to make sure that you get authorized to process Medi-Cal claims. This letter will let

Medi-Cal know that your CHOW has been approved with a certain effective date and that your

Congregate Living Health Facility will be receiving payment for Medi-Cal.