The Centers for Medicare & Medicaid Services (CMS), Survey and Certification Group has issued a memo that reiterates its policy on the timing of initial surveys for providers/suppliers who reject assignment when an acquisition of another provider/supplier organization occurs.
When an acquisition has occurred, CMS automatically assigns the existing Medicare provider agreement or supplier approval to the new owner. Automatic assignment means uninterrupted participation of the acquired provider or supplier in the Medicare program. There is also no required survey of the provider or supplier as a result of the acquisition.
However, new owners have the option to reject automatic assignment, resulting in termination of the prior Medicare agreement. Generally, rejecting assignment precludes the buyer from having successor liability for Medicare overpayments or underpayments. However, it also means that there has been a voluntary termination of the existing Medicare provider agreement. If the new owner rejects assignment, the provider/supplier must be treated as an initial applicant for participation in Medicare. Like all initial applicants the provider/supplier will experience a period with no Medicare payments.
Given the lead time normally required to schedule and prepare for a full survey, if an initial survey takes place shortly after the acquisition date, for example 14 days after the effective date of the acquisition, it suggest that the survey may have been unannounced. CMS is requiring that when a State Survey Agency (SA) conducts an initial certification survey of an applicant that acquired a provider/supplier but rejected assignment, the Region Office must review the case carefully to determine whether the SA deviated from CMS workload priorities as well as the SA’s typical practice for initial applicants.
The memo also reiterates that the effective date for Medicare participation of the provider under its new owner is established in the same manner as for any initial applicant, that is, after a prospective provider/supplier demonstrates it meets all Federal requirements. The effective date is not the date of the acquisition of the provider or supplier. Rather, the effective date of the Medicare agreement is the date when the last applicable Federal requirement has been met.
To view the Survey and Certification Memo click here