December 21, 2014

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December 19, 2014

Changes to Your Facility's Corporate Structure

Thinking of selling your facility, or of changing your corporate entity from a partnership to a limited liability company, bringing in a new management company, or adding a new partner to your current partnership structure? Each of these changes — and many other types of changes to your facility corporate or ownership structure — requires various types of notices and/or approvals from multiple government regulatory and payor agencies.

Clients sometimes call us for general advice and, in the course of exploring their issue, we discover they’ve made some sort of ownership or corporate structure change, often for tax reasons or on the advice of their accountant or investment advisor. We also sometimes learn that it never occurred to them to provide the required notice to government oversight agencies because they didn’t know it was required.

But it is. Any nursing facility or assisted living provider (and any other type of health care provider, for that matter) considering such a change should seek counsel to determine what, if any, notices to or approvals from government agencies and payors are required. Some types of changes are considered a “change of ownership” under both state and federal law. In those cases, updated and/or completely new Medicare and Medicaid enrollment forms must be filed with CMS and/or the N.C. Department of Health and Human Services. Notice to the Certificate of Need Section may also be required in some cases.

At a minimum, updates to existing Medicare and Medicaid enrollment forms, and state licensure information, are usually required, and sometimes within defined time frames, to ensure that “direct and indirect ownership” information is updated (i.e., advising the agencies regarding who directly owns the facility and of any “upstream” owners of that entity). You may also have an obligation under loan documents to provide notice, or seek formal approval, from any lenders that have financed your facility or operations.

Finally, it’s not always clear from existing statutes or regulations which sorts of corporate ownership or structure changes require new enrollment forms, updated enrollment forms or a simple notice to an agency. Failure to provide the notice can cause real problems down the line. Most of these notices or updates are fairly easy to accomplish, but in each case you should consider finding out what may be required for CMS, NC DHHS, and Medicaid, at a minimum.

Providing a required notice or updating relevant information is far easier on the front end than trying to explain the failure to do so — and to fix it — later on when the issue is raised for a regulatory agency or payor. If you are contemplating any type of ownership change, corporate restructuring, or other material change in your operations, get some help on the front end to determine what, if any, steps you need to take with the government, payors and lenders.

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About this Author

Partner

Ken is a health care attorney with more than 28 years of experience advising clients on a wide range of regulatory, reimbursement, litigation, compliance and operations issues.  His practice has focused heavily, but not exclusively, on issues affecting long term care providers.  He has advised them on a wide variety of legal planning issues arising in the skilled nursing facility setting, assisted living setting, hospice, home health and other spheres of long term care. He also frequently represents ancillary service providers (pharmacy, DME, therapy and...

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