The Centers for Medicare and Medicaid Services’ Final 2011 Home Health Agency Prospective Payment System update significantly clarifies the application of the 36-month change of ownership rule for home health agencies and exceptions to that rule. The update also clarifies home health agency capitalization and enrollment requirements, as well as patient face-to-face encounter requirements for home health agencies and hospices, effective January 1, 2011.

The Centers for Medicare & Medicaid Services (CMS) published its final Home Health Agency (HHA) Prospective Payment System (PPS) Rate Regulation, effective January 1, 2011 (the Final Rule), in the November 17, 2010, Federal Register. The Final Rule adds checkpoints requiring newly enrolling HHAs to document they have sufficient funds available to operate the HHA during the enrollment process, including a provision permitting the Medicare contractor to revoke newly issued billing privileges, after the HHA receives them, for failure to meet capitalization requirements. Based on comments to the proposed rule, the Final Rule changes the proposed exceptions to the controversial rule that prohibits the sale or transfer of HHA billing privileges where there is a sale or transfer of the HHA within 36 months after the effective date of the HHA’s initial enrollment in Medicare, or within 36 months after the HHA’s most recent change in majority ownership. The Final Rule also clarifies that indirect changes of ownership (i.e., changes at the parent or holding company level) are exempt from the 36-month rule.