Private equity and provider enrollment in Medicare

According to Bain & Company, the healthcare sector and private equity were not shielded from macroeconomic factors. The healthcare sector is vast and one of the hottest areas over the past several years, which has recently been chilled by federal government agency and bi-partisan Congressional investigations is the provider (e.g., hospital, physician practices, ambulatory surgery centers) subsector over concerns involving placing profits over patient care.

Still, for private equity firms and other types of acquiring entities that operate both legally and ethically and with patient-centered care as the focus, there are some fundamental items to consider when acquiring a Medicare Part B (i.e., Ambulatory Surgery Center, Portable X-ray Supplier). And, as I previously wrote in another Physicians Practice article, the CMS Form 855-A adopted changes in September 2023, which now requires owners, including private equity firms, to be listed.

A ”[C]hange of Ownership” (“CHOW”), “typically occurs when a Medicare provider has been purchased (or leased) by another organization.” As expressly stated on the CMS Form 855-B,

The CHOW results in the transfer of the old owner’s Medicare Identification Number and provider agreement (including any outstanding Medicare debt of the old owners) to the new owners. The regulatory citation for CHOWs can be found at 42 C.F.R. 489.18. If the purchaser (or lessee) elects not to accept a transfer of the provider agreement, then the old agreement should be terminated and the purchaser or lessee is considered a new applicant and must initially enroll in Medicare. (emphasis added).

In addition to the aforementioned Ambulatory Surgery Center and portable x-ray supplier, “a medical practice, group/clinic or other supplier that will bill for Medicare Part B services (e.g., group practices, clinics, independent laboratories, and portable x-ray suppliers)” are also required to submit a CMS Form 855-B, either to make changes, revalidate enrollment, reactivate a Medicare Billing Number, which is different than an NPI, or relay a CHOW.

According to the CMS website, the process for Medicare enrollment for providers and suppliers includes the following:

Use this guide if any of the following apply:

• You’re a health care provider who wants to bill Medicare for your services and also have the ability to order and certify.

• You don’t want to bill Medicare for your services, but you do want enroll in Medicare solely to order and certify.

• You wish to provide services to beneficiaries but do not want to bill Medicare for your services. (In this case, you would need to opt out of Medicare.)

• You want to enroll as a supplier who does not dispense or furnish durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). (You can still use this guide if you dispense Part B drugs used with DMEPOS, such as inhalation drugs.)

While most, if not all of the steps, can and should be completed online, there are a couple of fundamental items to keep in mind: (1) obtain an NPI; (2) complete the Medicare Enrollment application through PECOS (e.g., CMS Form 855); and (3) coordinate with your Medicare Administrative Contractor (MAC).

It is also imperative to keep the information current.

To avoid having your Medicare billing privileges revoked, be sure to report the following changes within 30 days:

• a change in ownership

• an adverse legal action

• a change in practice location

You must report all other changes within 90 days. If you applied online, you can keep your information up to date in PECOS. If you applied using a paper application, you’ll need to resubmit your form to update information.

In sum, the annual enrollment application fee for 2024 is $709, unless a hardship exception is met. It is also critical that providers enroll in the Medicare Program first in order to get paid for providing covered services to beneficiaries. These items are all important considerations during an acquisition or an infusion of capital by a third party that obtains an ownership interest, including a private equity firm.

Rachel V. Rose, JD, MBA, advises clients on compliance, transactions, government administrative actions, and litigation involving healthcare, cybersecurity, corporate and securities law, as well as False Claims Act and Dodd-Frank whistleblower cases.