When a facility changes ownership, this is referred to in CMS terms as a “CHOW”.  Many facilities are confused as to the actual CHOW date and how this affects their cost report.

Whenever a facility changes ownership, a cost report must be filed as of the date of change.

When a facility is sold, the new owners file for a CHOW.  This can take up to several months to process.  Once the CHOW goes through, the owners will receive their official “tie-in notice” from CMS or their intermediary informing them of the date of transfer of ownership.  This date must be noted carefully, as it may differ from what the facility thinks the date of transfer was.

The facility will simultaneously receive a letter informing them when the Medicare cost report for the prior owners is due.  Many facilities include in the contract of sale that the prior owners are responsible to file this cost report, which is through the CHOW date.  Please note, however, that if this is not filed in a timely manner, the facility (i.e., the new ownership) will have its payments withheld per Medicare regulations.  Therefore, it would be wise for the new ownership to follow up to make sure that the cost report has been filed.

A mid-year CHOW cost report will cover the dates from when the facility’s fiscal year began (usually January 1st) until, but not including, the date of the change of ownership.  All financial, statistical, and other information included on the cost report should be for this time period only.

The facility’s next year-end cost report (i.e., for the year of sale) will then cover the period from the CHOW date through the fiscal year end date (usually December 31st).  As above, all data on the year-end cost reports should cover the cost report period only and nothing from the prior owners.

Please note the difference between an actual sale as opposed to a stock purchase, which may simply be a change in DBA – doing business as.  A change in DBA often does not require a mid-year cost report.  In case of doubt as to whether there was a change of ownership or simply a change of DBA, the facility’s intermediary must be consulted for clarification in order to avoid withholding of payments.

Disclaimer:  This blog does not contain legal advice. What it does contain are our best
explanations, advice, and suggestions to help facilities and cost report preparers to understand the cost report forms and offer suggestions for their preparation. Progressive Provider Services assumes no legal responsibility for the content of this blog, nor for cost reports prepared based on the content herein.