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.
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