Included in the 2024 Home Health Final Rule, CMS extended the 36-month rule to Medicare-certified hospice agencies. The 36-month rule already applied to home health and, effective January 1, 2024, now applies to hospices.
In general, the 36-month rule prohibits the transfer of a home health or hospice agency’s Medicare provider agreement and Medicare billing privileges to a new majority owner within 36 months of either the provider’s initial Medicare enrollment or the provider’s most recent change in majority ownership. For purposes of this rule, a “change in majority ownership” means when more than 50% direct ownership interest in a home health or hospice agency is transferred in a transaction, including asset sales, stock sales, mergers, or consolidations.
There are a few exceptions for change in majority ownership transactions that would result in a situation where the 36-month rule does not apply. These include the following:
- The home health or hospice has submitted two consecutive years of full cost reports since its initial Medicare enrollment or the most recent change in majority ownership (low-utilization or no-utilization cost reports do not qualify).
- The home health or hospice’s parent entity is going through an internal corporate restructuring, i.e., a merger or a consolidation.
- The home health or hospice is changing its business structure (from one entity type to another, including corporation, partnership, LLC, etc.) and the actual owners remain the same.
- The home health or hospice owner dies, regardless of the percentage ownership that owner had in the agency.
With respect to timing of the application of the 36-month rule for hospices, any ownership transactions with effective dates occurring on or after January 1, 2024 are impacted, regardless of when the hospice’s initial Medicare enrollment occurred or its most recent previous change in majority ownership occurred.
Once a home health or hospice agency’s Medicare Administrative Contractor (MAC) receives a Form CMS-855A application for an ownership change, the MAC will follow a process to determine if the 36-month rule applies to such transaction. If the 36-month rule does not apply, then the MAC will process the application normally. Conversely, if the 36-month rule is found to apply, then the MAC will refer the case to its Provider Enrollment Oversight Group (PEOG) Business Function Lead (BFL) for review. After the PEOG BFL review, if it is concluded that the 36-month rule does apply, a “36-Month Rule Voluntary Termination Letter” will be sent to the home health or hospice stating that the provider agreement and Medicare billing privileges do not convey to the new owner, and instead, the prospective owner must go through the process to enroll as an initial application and obtain a new state survey or accreditation survey.
Agencies should be mindful of the new regulations impacting hospice change of ownership transactions in 2024.
Contact a Home Care & Hospice industry advisor at FORVIS for further information.