CMS issues guidance on survey timing for facilities that change ownership

Surveyors should prevent providers from being able to game the Medicare system through well-timed facility sales and purchases, the Centers for Medicare & Medicaid Services instructed in a recent memorandum.

When a new owner acquires an existing facility that has been certified for Medicare participation, CMS can automatically assign Medicare certification to the new owner. However, the new owner could also reject automatic assignment. In this case, the new owner generally would not be liable for reimbursing Medicare for overpayments that occurred prior to the sale. A full initial survey would be needed to reestablish the facility’s Medicare certification.

If surveyors disregard CMS policy and prioritize doing initial surveys rather than complaint investigations and other “core work,” they open the door for outgoing owners to take advantage of the system, according to the Sept. 6 memo. Providers who owe CMS for overpayments or civil monetary penalties could more easily sell their facilities to escape liability if purchasers can count on quick acceptance into the Medicare program, even if they reject automatic assignment.

The memo lays out a number of “long-standing” policies regarding initial certification surveys, including that all surveys must be unannounced. An initial survey that takes place shortly after a facility changes ownership “suggests discussion” has occurred between the surveyor and the owner, according to CMS.

Any survey that takes place within two weeks of an acquisition with rejection of automatic assignment “warrants closer review” by a CMS regional office, the memo states.

The full memorandum can be found at www.cms.gov

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