On May 2, 2019, CMS issued a proposed rule that would add requirements and a specific process to address changes of ownership as they relate to the sale, transfer, and/or purchase of assets of CMS-approved Accrediting Organizations (AOs). CMS seeks public comments related to the proposed regulatory requirements and specifically solicits feedback regarding the types of documents that an AO should submit such as financial statements, a transition plan, and acknowledgments of the financial and legal responsibilities. Comments are due no later than 5:00 p.m. ET on July 1, 2019.

By way of background, Section 1865(a) of the Social Security Act allows most types of Medicare-certified providers and suppliers to demonstrate compliance with the applicable health and safety requirements through accreditation by a CMS-approved accreditation program of a national accreditation body, known as an AO. CMS refers to this as “deemed” accreditation because if an AO is recognized by the Secretary as having standards for accreditation that meet or exceed Medicare requirements, any provider or supplier which is accredited by that AO’s CMS-approved accreditation program is deemed by CMS as complying with the applicable Medicare conditions or requirements.

Although Medicare-enrolled providers and suppliers are required to comply with a change of ownership process as set forth at 42 C.F.R. § 489.18, under current regulations, AOs are not required to provide CMS advanced notice of pending changes of ownership. Often, CMS is first notified of an ownership change when an AO, under new leadership, applies for renewal of its agreement to CMS or it voluntarily notifies the agency. CMS proposes to establish requirements that would obligate AOs to similarly comply with change of ownership advance notification and other requirements and is modeling this change of ownership approval process on the established process for the change of ownership of Medicare-certified providers and suppliers described in 42 C.F.R. § 489.18. 42 C.F.R. § 489.18 describes what changes CMS considers to be a “change of ownership,” and the notice requirements for the same. CMS notes that instituting the proposed changes would require potential owners of the AO to submit documentation and information confirming their ability to effectively perform the required accreditation tasks after the change of ownership takes place.

This proposal is the latest in a series of actions CMS has taken to improve oversight of AOs. In October 2018, CMS said it would begin posting AO performance data online. Read more regarding CMS’s earlier initiative here.