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CMS finalizes rule on ownership changes at accreditation groups

Accreditation organizations will need to notify the Centers for Medicare and Medicaid Services of a change in ownership at least 90 days before it occurs, according to a rule finalized by the agency Wednesday three years after it was proposed.

Following the notice, CMS will determine whether the new ownership is equipped to accredit facilities and meet Medicare standards. CMS can’t approve or disapprove business transactions, but it does need to ensure a new owner is eligible for Medicare participation, the agency said.

Potential new owners will need to submit information to CMS to support their request to transfer accreditation approval from the departing owner, including a plan on how to avoid conflicts of interest. CMS will complete its review within 90 days of receiving a request.

Parties to a change of ownership must notify providers affected by the change within 15 days after CMS’ approval of transfer of the accreditation program.

If an ownership change is completed without CMS’ approval, providers or suppliers accredited by the organization can take steps to keep their status for 180 days after the organization’s approval is revoked.

Previously, CMS only knew about the sale of an accreditation organization when the organization applied for renewal of CMS approval or it voluntarily notified the agency. Only two change-of-ownership requests for accrediting organizations have been submitted to CMS—one 20 years ago, and one in November 2020, according to the agency.

But CMS believes ownership changes could occur more frequently going forward.

CMS started a push to improve transparency of accreditors following a 2017 Wall Street Journal investigation that found the Joint Commission, a major hospital accreditor, rarely pulled providers’ accreditation status, even when Medicare violations were found. A separate study in 2018 found Joint Commission accreditation doesn’t lead to better outcomes.

The Joint Commission objected to the rule when CMS proposed it in 2019. The organization worried that requiring 90 days’ notice before the transfer could hurt a sale, and said the proposed requirements could be seen as “unwarranted regulatory interference.” The Joint Commission was also concerned that CMS wasn’t proposing to guarantee confidentiality in the review process.

The organization recommended CMS instead require accrediting organizations to alert an ownership change within 15 days after ownership is officially transferred.

But CMS disagreed, and said it believes it has the authority to perform the necessary reviews.

“[T]he new owner might have an expectation that CMS’s approval of an accreditation program would be a transferable business asset or an intrinsic part of the accreditation program that would automatically transfer, along with the accreditation programs, to the new owner… However, this rule clarifies that CMS approval of accreditation programs is not freely transferable, without regulatory oversight, qualifications or conditions,” CMS wrote in the final rule.

CMS also wrote that it will make every effort to protect the confidentiality of information submitted for change of ownership reviews.

The Joint Commission did not immediately respond to a request for comment on the final rule.

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