Change of Ownership and the Medicare Moratorium - What Buyers and Sellers Need to Know
Most agency owners planning a sale understand the change of ownership process. Fewer realize that the current Medicare enrollment moratorium can reach into CHOW transactions, and that a deal structured the wrong way can lose its Medicare enrollment entirely.
Here is the part worth stating clearly up front, because it is widely misunderstood. The moratorium does not apply to all CHOWs. It applies to initial enrollment applications and to non-exempt changes in majority ownership, which CMS refers to as CIMOs. Plenty of ownership transactions fall outside it entirely.
That distinction is easy to miss. It took reading back through the regulations to see exactly how it works, so here it is broken down in plain terms.
What the Moratorium Actually Covers
On May 13, 2026, CMS implemented a nationwide moratorium on new Medicare enrollment for home health agencies and hospices. The initial term runs through November 12, 2026, and CMS may extend it in additional six-month increments or lift it earlier.
The moratorium applies to Medicare only. CMS has encouraged states to consider similar pauses on Medicaid enrollment, but each state decides independently.
Existing enrolled providers continue operating without interruption. Routine changes of information, revalidations, and ongoing reporting obligations all proceed normally. CMS has been clear that the moratorium does not suspend compliance requirements.
Applications the Medicare Administrative Contractor received before May 13, 2026 are not affected.
The 36-Month Rule Is the Pivot Point
Under 42 CFR 424.550(b), a change in majority ownership occurring within 36 months of a home health agency’s initial Medicare enrollment, or within 36 months of its most recent change in majority ownership, whichever is later, may require the new owner to enroll as a new provider.
That is the connection people miss. Because the transaction would require an initial enrollment application, it falls under the current moratorium and CMS will deny it.
The reverse is equally important. If the agency has been enrolled in Medicare longer than 36 months, a change of ownership does not constitute an initial application and the moratorium does not apply.
Exceptions to the 36-Month Rule
Several exceptions exist. A change in majority ownership may be exempt when any of the following applies.
- The agency has submitted two consecutive years of full cost reports since its initial enrollment or its most recent change in majority ownership, whichever is later. Low-utilization and no-utilization cost reports do not qualify as full cost reports.
- The parent company is undergoing an internal corporate restructuring, such as a merger or consolidation.
- The owners are changing the organization’s existing business structure while ownership remains the same, such as converting from a corporation to an LLC.
- An individual owner of the home health agency dies.
If your transaction fits one of these, the CIMO is exempt and the moratorium is not the obstacle.
Do the Diligence Before You Characterize the Deal
Determining whether a proposed acquisition is a non-exempt CIMO requires reviewing four things: the agency’s Medicare enrollment date, its history of changes in majority ownership, its cost reports, and its ownership structure.
Those four items tell you whether the 36-month clock is running, whether an exception applies, and therefore whether the transaction can proceed during the moratorium.
Structure matters as well. Asset purchase versus equity purchase, whether the provider number stays with the entity, and whether control genuinely shifts all influence how CMS views the transaction. CMS and the applicable MAC make the final determination, not the parties to the deal.
CMS has published a question-and-answer document addressing the moratorium and its interaction with ownership changes, available through the Centers for Medicare & Medicaid Services at https://www.cms.gov/files/document/hh-hospice-moratorium-faqs.pdf
Practical Steps Before You Sign Anything
Confirm the enrollment history first. Find out when the agency initially enrolled and when its most recent change in majority ownership occurred. Those dates tell you whether the 36-month rule is in play at all.
Pull the cost reports. Two consecutive years of full cost reports may exempt the transaction outright. Verify they are full reports rather than low-utilization or no-utilization filings.
Get the characterization confirmed. Do not assume. Confirm the treatment with the MAC or CMS before you commit to a closing schedule.
Allocate the regulatory risk in the agreement. Buyers and sellers frequently discover they held different assumptions about who bears the consequence of a denied enrollment. Address it in writing.
Build a realistic timeline. Deals that depend on enrollment approval need contingency language, not optimism.
Expect more scrutiny. CMS has signaled increased audit and enforcement activity during this period. Agencies with weak documentation face exposure well beyond the transaction itself.
Get an Assessment Before the Deal Moves
A denied enrollment can unwind a closing, disrupt revenue, and trigger default provisions in a purchase agreement. The time to identify that risk is before you sign, and the answer often turns on dates and cost reports that take an afternoon to verify.
HomeSights Consulting has guided home health and hospice providers through licensure, accreditation, ownership transitions, and compliance for more than 25 years.
Call 844-HSC-REGS or reach out through our website.