Current through Reg. 49, No. 38; September 20, 2024
(a) Definition. An
ownership change is defined in § 554.210(c) of Title 40 (relating to
Temporary Change of Ownership). For purposes of this section, prior owner is
defined as the legal entity with a Medicaid contract for the facility before
the change of ownership. The new owner is the legal entity to which DADS has
assigned the contract (in accordance with
42 CFR
§442.14 and subsection (d) of this
section). The effective date of the ownership change is the effective date of
the new owner's license for the facility.
(b) Notice of ownership change. The prior
owner must give DADS written notice of a change of ownership at least 30 days
before the effective date of the change. If written notice of the change is not
received 30 days before the agreed change date, DADS is not responsible for
payments made to the prior owner or new owner that do not reflect the
established change date. DADS will not make a duplicate payment. It is the
responsibility of the prior and new owner to make arrangements between
themselves for such contingencies.
(c) Vendor holds based on a change of
ownership.
(1) Holds on payments due to a
prior owner.
(A) When DADS receives
information about a proposed or actual change of ownership, DADS may place
vendor payments to the prior owner on hold. Vendor payments will not be
released until the Texas Health and Human Services Commission notifies DADS
that the prior owner meets the final reporting requirements as specified in 1
TAC §
355.306(relating
to Cost Finding Methodology) and 1 TAC §
355.308(f)(1)(A)
(relating to Direct Care Staff Rate Component).
(B) Once the final reporting requirements in
subparagraph (A) of this paragraph are met, vendor payments may still be held
so that money owed to DADS can be recouped from the funds placed on hold.
Vendor payments will be released after:
(i)
completion of a billing and claims reconciliation, or the passing of a time
period of 12 months after the effective date of the change of ownership,
whichever is sooner; or
(ii) the
prior owner provides, at DADS' option, either of the following documents in a
format acceptable to DADS to cover possible liabilities of the prior owner:
(I) a surety bond or an irrevocable letter of
credit as described in § 554.2312(f)(1)(A) of Title 40 (relating to Surety
Bonds or Letters of Credit); or
(II) written authority by the prior owner to
withhold and retain funds normally due the prior owner from other Medicaid
contracts the prior owner may have with DADS.
(2) Waiving holds on payments due
to a prior owner.
(A) DADS may waive placing
vendor payments to the prior owner on hold, if, at least 60 days before the
effective date of the change of ownership:
(i) the prior owner notifies DADS of the
change of ownership;
(ii) the new
owner provides DADS with a signed and notarized contract application;
(iii) DADS receives information sufficient to
verify that the ownership change is a reorganization of the prior owner's
ownership structure and that the new owner's ownership structure:
(I) consists of individuals who owned at
least 51% of the ownership in the prior owner and own at least 51% of the
ownership in the new owner;
(II)
does not consist of a change in a general partner, if the prior owner's
ownership structure was a limited partnership; and
(III) retains control of the prior owner's
financial records; and
(iv) the prior owner returns to DADS the
nontransferable DADS Successor Liability Agreement (provided by DADS) signed by
the prior and new owners indicating that the new owner has agreed to pay DADS
for any liabilities that exist or may be found to exist during the period of
the prior owner's contract with DADS.
(B) Meeting the conditions in subparagraph
(A) of this paragraph but not meeting the 60-day time frame may result in DADS
placing vendor payments to the prior owner on hold; however, once all of the
conditions listed in subparagraph (A) of this paragraph are met, the hold will
be released.
(3) Holds
on payment due to the new owner.
(A) During
the period between the issuance of the temporary change of ownership license
and the inspection or survey of the nursing facility, DADS may not place a hold
on vendor payments to the temporary license holder.
(B) If the nursing facility fails to pass the
inspection or survey or fails to meet the requirements in § 554.201 of
Title 40 (relating to Criteria for Licensing), DADS may place a hold on vendor
payments to the new owner.
(d) Contract assignment. When a change in
ownership occurs, DADS automatically assigns the agreement to the new owner by
issuing a new contract. By signing the contract, the new owner is representing
to DADS that the new owner meets the requirements of the contract and the
requirements for participation in the Medicaid program. The new owner's
contract is subject to the prior owner's contract terms and conditions that
were in effect at the time of transfer of ownership, including the following:
(1) any plan of correction;
(2) compliance with health and safety
standards;
(3) compliance with the
ownership and financial interest disclosure requirements of
42
CFR §§455.104,
455.105,
and
1002.3;
(4) compliance with civil rights requirements
in 45 CFR Parts 80, 84, and 90;
(5)
compliance with additional requirements imposed by DADS; and
(6) any sanctions as specified in this
chapter relating to remedies for violations of Title XIX nursing facility
provider agreements, including deficiencies, vendor holds, compliance periods,
accountability periods, monetary penalties, notification for correction of
contract violations, probationary contracts, and history of
deficiencies.
(e)
Medical assistance payments nontransferable. Neither medical assistance nor
amounts payable to vendors out of public assistance funds are transferable or
assignable at law or in equity. DADS will not allow non-split agreements in the
case of ownership changes. Non-split agreements are arrangements where DADS
does not interrupt payments to prior and new owners but continues
reimbursements as though no ownership change has occurred. A split in pay
agreement ensures that payments to the prior owner stop on a certain date and
payments for services thereafter go to the new owner.
(f) Owner agreements. The new owner and the
prior owner of a nursing facility may reach any agreement they wish, but DADS
will not participate in a non-split procedure which would allow the new owner
to receive the prior owner's accrued vendor payments.
(g) Financial records. The prior owner of the
facility may remove the financial records pertaining to his period of ownership
from the facility, but must maintain them for the time period prescribed by law
or until such time as all audit exceptions are reconciled, whichever period is
the longer. The original copies of the trust fund records, including ledger
cards, may be removed by the prior owner if an exact duplicate of the trust
fund records, including ledger cards, remains with the new owner.
