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Key takeaways
- The current regulation covers both home health agencies and hospices.
- CHOW and change in majority ownership are distinct analyses.
- Trace the enrollment and ownership chronology and support any claimed exception with evidence.
Read the rule in its proper scope
42 CFR 424.550 addresses specified majority-ownership changes after initial enrollment or a recent majority-ownership change. It includes consequences and exceptions. Read the current text rather than relying on a shorthand phrase such as “three-year-old license.” (Source: eCFR, 2026)
Build the chronology
Ask for initial enrollment records, ownership charts, prior transaction documents, reported changes, and the records supporting any claimed exception. Identify direct and indirect ownership and changes that occurred in stages. Counsel should decide which events matter under the applicable definitions.
| Question | Supporting record |
|---|---|
| When did Medicare enrollment become effective? | Enrollment determination |
| What ownership changes followed? | Entity and transaction chronology |
| What exactly will this buyer acquire? | Proposed structure and ownership chart |
| Is an exception asserted? | Relevant cost reports or other supporting facts |
| Does the enrollment path remain available? | Current CMS notice and transaction-specific review |
Do not confuse CHOW with CIMO
42 CFR 489.18 addresses the provider-agreement effect of specified ownership changes. The majority-ownership rule is a separate review. A conclusion that an equity transaction is not a CHOW under one provision does not by itself establish that no enrollment restriction applies. (Source: eCFR, 2026)
Connect the conclusion to the business plan
If the buyer's forecast assumes existing billing continues, identify the basis for that assumption. Include timing, cash reserves, clinical leadership, and the responsibilities of the seller and buyer. Avoid relying on an unreviewed interim-management plan.
Recheck the current moratorium
CMS's May 2026 notice adds a current application constraint for affected home health and hospice enrollments. Review its status and the guidance applicable to the transaction before proceeding. (Source: CMS, 2026)
This article is an issue-identification aid. Counsel and the appropriate authorities must assess the actual ownership history, exception evidence, and proposed enrollment path.
Apply the related licensing and diligence guidance
Apply this enrollment analysis alongside the home health diligence checklist or hospice diligence checklist. Payment, staffing and clinical review remain necessary after the ownership pathway is assessed.
Frequently asked questions
Does the age of the LLC prove the rule no longer matters?
No. Review the initial Medicare enrollment and relevant ownership-change dates, not just the legal entity's formation date.
Does the rule cover stock transfers?
The regulation expressly includes specified sales, stock transfers, mergers, and consolidations in its majority-ownership framework. Have counsel apply the definitions to the actual structure.
Are there exceptions?
The regulation lists exceptions involving qualifying full cost reports, certain internal restructurings, changes of business form with the same owners, and an owner's death. Eligibility for an exception requires specific facts and review.
Why does the moratorium matter?
If the proposed change requires initial enrollment, the current moratorium may affect that path. Review both issues together before committing to a timetable.
Sources
Sources are dated to distinguish current guidance from earlier publications. They support the identified facts; the transaction questions and examples are educational analysis.
- eCFR: 42 CFR 424.550 (2026). Retrieved September 5, 2026.
- eCFR: 42 CFR 489.18 (2026). Retrieved September 5, 2026.
- CMS: provider enrollment moratoria (2026). Retrieved September 5, 2026.