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Moratorium on New Home Health Agencies Leads to New Opportunities for Existing Investors

By Joesph G. Sapp, LL.M.

Bad news for new applicants for Medicare certification for home health care providers seeking certification for governmental insurance programs. Effective January 29, 2016, CMS and HHS have issued a moratorium of new Medicare Part B non-emergency ground ambulance suppliers and Home Health Agencies. Five (5) states are directly affected by this decision: Florida, Michigan, Illinois, Texas, Pennsylvania, and New Jersey. The basis for this decision is to further and effort to combat fraud, waste, and abuse. Therefore, this statewide application will prevent new start-up home health agencies from even applying for licensure under Medicare, Medicaid, and the Children’s health Insurance Program (“CHIP”).

In accordance with section 424.570(a)(2)(i) and (iv), CMS or CMS in conjunction with the Department of Health and Human Services’ Office of the Inspector General (“HHS-OIG”) or the Department of Justice (“DOJ”) or both, may impose a temporary moratorium on newly enrolling Medicare providers if there is a determination by CMS that there exists a significant potential for fraud, waste, or abuse with respect to the type of provider. At this time the two (2) highest providers under scrutiny for Medicare fraud are the fields of Home Health Providers, and pharmaceutical compounding of pain cream, scar cream, and laboratories engaging in genetic testing.

While this current moratorium has only been extended for six (6) months, there is no authority preventing CMS from extending this stay indefinitely. What would seem like a blight to existing applicants for Home Health status certification is also a benefit from current Home Health Services looking to sell their existing business, or current investors looking to expand their portfolio by acquiring a profitable business structure. Chapman Law Group works closely with both buyers and sellers of Home Health Care Agencies in both the audit process of claims for current owners and the due diligence process of buyers looking to acquire current Home Health Care Agencies to expand their existing profit margin while limiting their liability.

While this moratorium stands any asset purchase agreement would see a drastic interruption of cash flow from the lack of availability of government funds. Therefore, the only way a current purchase of an existing Home Health Agency could occur would be through a Stock Purchase Agreement which carries with it its own potential pitfalls. Chapman Law Group is experienced working with existing brokers, accountants, and governmental officials to ensure a smooth transition from any investment or selling structure. With offices in Michigan, Florida, and Idaho, we are prepared to assist anywhere in the United States with all matters of transactions, compliance issues, self-audits, as well as criminal defense from experienced criminal defense attorneys focusing on false claims, Medicare and Medicaid fraud. Chapman Law Group attorneys are highly educated with years of experience, advanced health care law degrees, and former federal prosecutors.

Joseph G. Sapp, Esquire is a health care attorney at Chapman Law Group providing representation in the fields of CMS and meaningful use audits and appeals, as well as specializing in health care transactions including pharmacies, ambulatory surgery centers, urgent care facilities, marketing arrangements, physician employment and independent contractor agreements, as well as practice acquisition.