A Change of Ownership (CHOW) is the regulatory process under 42 CFR 489.18 by which Medicare-certified providers (home health agencies, hospices, DME suppliers, and others) transfer the Medicare provider agreement to a new owner. The CHOW is the federal regulatory mechanism for transferring CMS provider status in connection with a sale.

Does every home care sale require a CHOW?

Only sales involving Medicare-certified providers (home health, hospice, certain DME, and other CMS-enrolled provider types) trigger CHOW requirements. Private-pay and Medicaid-only personal care agencies do not file CHOW with CMS but may have analogous state Medicaid notification requirements.

What is the CHOW timeline?

Stock-sale CHOW (notification only): typically 30–90 days for processing. Asset-sale CHOW (treated as new enrollment in many cases): typically 90–180+ days. Timeline impacts close date and post-close billing continuity. CHOW timing is one of the most significant practical differences between asset and stock sale structures.

What is successor liability in a CHOW?

When a Medicare provider agreement is assigned in a CHOW (typical in stock sales), the new owner becomes liable for prior overpayments, recoupment exposure, and other Medicare obligations of the prior owner. This successor liability is a primary reason buyers conduct extensive billing compliance diligence and require seller indemnification (or specific escrow) for pre-close audit exposure.

Can the buyer reject the assigned Medicare provider agreement?

In asset sales, the buyer can elect to take the existing provider agreement (with successor liability) or apply for a new provider number (without successor liability but with longer enrollment timeline). The choice has significant implications for both timing and risk. In stock sales, the entity continues with its existing provider agreement and assignment is typical.

CMS CHOW Home Health Hospice Sale

For home health agencies, hospice providers, and other CMS-enrolled home care entities, the Change of Ownership (CHOW) process is one of the most consequential regulatory components of a sale. CHOW timing affects close date. CHOW structure affects successor liability. CHOW execution affects post-close billing continuity.

This guide covers what home care sellers need to understand about CHOW.

The Regulatory Framework

CHOW is governed primarily by 42 CFR 489.18 along with the Medicare Provider Enrollment regulations (42 CFR 424). The framework defines:

What constitutes a CHOW
Notification requirements
Provider agreement assignment
Successor liability
Timing requirements

The CHOW process is administered by the Medicare Administrative Contractor (MAC) for the provider’s region.

What Triggers CHOW

A CHOW is triggered by:

Stock or equity sale resulting in change of ownership
Asset sale where buyer assumes the provider agreement
Merger or consolidation
Lease of assets in some structures
Other change of ownership as defined by CMS

CHOW reporting is required even when ownership change does not include the provider agreement (for tracking purposes).

Stock Sale CHOW Mechanics

In a stock sale, the entity (and therefore the Medicare provider agreement) continues. The CHOW process is:

Pre-close notification. Notification to CMS (via MAC) of pending change of ownership, typically 60+ days before close.
855A submission. Filing of CMS 855A (Medicare Enrollment Application — Institutional Providers) with change of ownership information.
Provider agreement assignment. The existing provider agreement is automatically assigned to the new owner per 42 CFR 489.18.
Successor liability. New owner assumes liability for prior overpayments and Medicare obligations.
Continued billing. Provider continues billing under existing PTAN without interruption.

Timeline: Typically 30–90 days for CMS processing. Faster than asset sale CHOW.

Asset Sale CHOW Mechanics

Asset sales offer the buyer a choice:

Option A: Accept Provider Agreement Assignment

Existing provider agreement assigned with successor liability
Existing PTAN continues
Faster close timeline
Buyer assumes prior overpayment exposure

Option B: Apply for New Provider Number

Existing provider agreement terminated
Buyer files new 855A as new enrollment
New PTAN issued
Site visit may be required
No successor liability for prior overpayments
Longer timeline (90–180+ days)
Potential billing gap

The choice depends on buyer’s risk tolerance and seller’s compliance history.

Successor Liability

Successor liability under CHOW is one of the most consequential issues for both buyers and sellers.

What transfers with the provider agreement:

Prior overpayment liability (RAC, ZPIC, UPIC, MAC findings)
Pending audit exposure
Cost report settlements (positive or negative)
Civil monetary penalties
Compliance corrective action plans
Survey deficiencies

Mitigation through deal structure:

Seller indemnification with appropriate cap
Specific escrow for identified audit exposure
R&W insurance coverage (some matters)
Tail insurance for specific exposures
New provider number election (asset sale only)

Healthcare-specialized R&W underwriting addresses much CHOW-related successor liability — but specific identified exposures typically remain seller-indemnified outside R&W.

State Medicaid Implications

Medicare CHOW does not automatically address Medicaid enrollment changes. State Medicaid programs typically require:

Separate CHOW notification
Updated provider enrollment
New or continued provider agreement
State-specific licensure transfer (often parallel)
Managed Medicaid plan notification

State timelines vary widely. Some states process Medicaid CHOW in 30 days; others take 90+ days. Multi-state agencies face cumulative timing complexity.

Accreditation Transfer

Medicare-certified home health and hospice agencies typically maintain accreditation through:

The Joint Commission
ACHC (Accreditation Commission for Health Care)
CHAP (Community Health Accreditation Partner)

Accreditation transfer in CHOW:

Stock sale: existing accreditation typically continues with notification
Asset sale with new PTAN: typically requires new accreditation survey
Asset sale with assignment: notification typically sufficient

Accreditation re-survey can add 60–120+ days to operational timeline.

Pre-CHOW Preparation

Sellers preparing for CHOW should:

Compliance Inventory

Pending RAC, ZPIC, UPIC, MAC matters
Survey deficiencies and corrective action status
Civil monetary penalties
Cost report status

Provider Documentation

Current 855A on file
Updated authorized officials
Current ownership disclosure
Updated managing employees

Cost Report Status

Filed cost reports current
Pending settlements documented
Tentative settlements reviewed

Audit Reserves

Documentation of identified audit exposure
Reserve methodology
Status of pending appeals

State Coordination

State Medicaid notification process understood
State licensure transfer coordinated
Managed Medicaid plan notification list

CHOW Timing Considerations

CHOW timing affects deal structure in several ways:

Pre-Close Timing

60+ day pre-close notification typical
Delayed filing delays close
Coordination with regulatory counsel essential

Close Date Coordination

CHOW effective date typically aligns with closing date
Billing systems must be ready for cutover
Cash collection coordination

Post-Close

855A processing post-close
PTAN confirmation
First post-close billing cycle critical
Settle-up of pre-close cost report items

Working Capital and Cash Flow

AR collection during CHOW transition
Pre-close billing cutoff
Post-close billing initiation
Lockbox arrangements

Common Seller Mistakes

1. Underestimating CHOW timeline. Asset sale CHOW can delay close by 90+ days.

2. Late state Medicaid coordination. State processes are independent of federal CHOW.

3. Inadequate audit exposure documentation. Pre-close audit findings affect successor liability and indemnification negotiation.

4. Cost report timing ignored. Pending cost report settlements affect deal economics.

5. Accreditation transfer neglected. Accreditation re-survey can disrupt operations.

6. Inadequate billing transition planning. Pre-close to post-close billing transition affects cash flow.

7. Multi-state complexity underestimated. Each state operates independently.

How Hendon Partners Helps

Hendon Partners coordinates with CMS regulatory counsel to plan and execute CHOW timing in alignment with overall deal timeline. We help sellers prepare CHOW documentation, address audit exposure proactively, and structure successor liability allocation through indemnification and R&W coverage.

Schedule a confidential CHOW-aware conversation with Hendon Partners →

Hendon Partners is a sell-side only home care M&A advisory firm. We coordinate with — but do not provide — regulatory or legal counsel.

CMS Change of Ownership (CHOW) for Home Health & Hospice: A Seller's Guide