# CMS Change of Ownership (CHOW) for Home Health & Hospice: A Seller's Guide > The CMS Change of Ownership (CHOW) process determines how Medicare provider numbers transfer in home health and hospice sales. Here is what sellers must know about timing, structure, and successor liability. Source: https://www.hendonpartners.com/insights/cms-change-of-ownership-chow-home-care-sale Author: Neli Gertner Published: 2026-05-04 Category: Seller Guides Tags: CHOW, CMS, change-of-ownership, home-health, hospice, glossary ---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: 1. **Pre-close notification.** Notification to CMS (via MAC) of pending change of ownership, typically 60+ days before close. 2. **855A submission.** Filing of CMS 855A (Medicare Enrollment Application — Institutional Providers) with change of ownership information. 3. **Provider agreement assignment.** The existing provider agreement is automatically assigned to the new owner per 42 CFR 489.18. 4. **Successor liability.** New owner assumes liability for prior overpayments and Medicare obligations. 5. **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 →](/contact-us)** --- *Hendon Partners is a sell-side only home care M&A advisory firm. We coordinate with — but do not provide — regulatory or legal counsel.* --- ## Frequently Asked Questions ### What is a CHOW? 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.