For many home care agency owners, building the business to be sold is a driving force. On the flip side, buyers are looking for lucrative acquisition targets, which are payer diversified and operate like well-oiled machines. According to Mertz Taggart, a leading mergers and acquisitions firm in the home care sector, investors have developed “a strong interest in home-based care providers that service Veterans.”
When it comes to changes of ownership, consultants are often able to assist with this process, or you can access online guides. However, these are most often aimed at agencies that only support Private Pay clients and often overlook the complexities of managing Veterans Affairs (VA) clients during such transitions.
It is vital to know that there are specific requirements and steps involved in a Change of Ownership with the VA that must be followed. Non-compliance with VA-specific requirements during a merger or acquisition can have serious consequences, such as losing Veteran clients or disrupting the continuity of the Veterans’ care.
Managing Change of Ownership as a VA-Contracted Agency
When initiating a change of ownership for an agency that is a VA Community Care provider, the first step is identifying the type of ownership transition: a stock purchase or an asset purchase. Typically, in home care, asset purchases are more prevalent. We will clarify the distinctions between these two types and the necessary steps required for each. The focus will also include the procedures involved in expanding your service area with respect to the VA, Optum, or TriWest.
Stock Purchase
In a stock purchase for a home care agency, the buyer acquires the entire legal business, including important identifiers like the Tax ID (EIN) and the National Provider Identifier (NPI) number. This means taking over all of the seller's responsibilities and debts. Essentially, the buyer becomes the new owner of the current business setup, with all its existing contracts and obligations.
Stock Purchase for VA-Enrolled Agencies
- The overall ownership structure of the home care agency doesn't change; the EIN, NPI, and business name remain consistent.
- All existing entity contracts, including the CCN contract (with Optum or TriWest), are automatically transferred to the new owner.
- The primary updates required involve the agency's banking information, VA portal logins, and NPI authorized official, to reflect the change in management.
Asset Purchase
In an asset purchase for a home care agency, the buyer acquires specific assets rather than the entire business. This could include the client base, agency name, website, and address. A key difference from a stock purchase is the need to establish a new legal entity for owning these assets. The buyer does not inherit the original business's liabilities or Tax ID and starts with a new setup. Crucially, when transferring VA clients, it's essential to ensure they are moving to an agency that is properly enrolled in the VA Community Care Network.
Asset Purchase for VA-Enrolled Agencies
- In this transition, there's typically a change in the ownership of the home care agency, potentially involving a new EIN, NPI, and business name.
- The newly formed entity must undergo contracting and credentialing processes with entities such as Optum or TriWest.
- It's crucial to facilitate the transfer of authorizations to this new entity to ensure continuity of care for the clients. Agencies must work with social workers or case managers at the VA Medical Center that issues the authorizations.
- If the new entity is not yet credentialed with Optum or TriWest at the time of transition, several issues could arise. This includes the potential reassignment of your Veteran clients to other agencies or payment complications.
Expanding Your Territory: Essential Steps
- Always notify the VA when planning to extend your service area.
- Starting a new business with a new physical office requires undergoing the complete enrollment process.
- When expanding your current business with a new office, the main step is to complete credentialing for this new location. This process is crucial and will be included as part of your existing contract. For more information about the credentialing process click here.
Questions You Should Ask Yourself
When considering a Change of Ownership, it’s essential to start asking key questions, especially if Veterans are included in your census, such as:
- Do you have a contingency plan if your new location isn't credentialed in time following an asset purchase?
- Are you in regular communication with your local Veterans Affairs Medical Center (VAMC)?
- Are you familiar with the process of updating contact information with Optum or TriWest?
- Do you understand the billing process for the VA CCN?
- Are you well-versed in the operations of the VA Community Care Network?
- Do you know all the necessary portals you will need access to for efficient management?
- Do you know the exact CCN enrollment date of the agency you are acquiring?
- Have you identified any existing regulatory issues with the business, and how do you plan to address them during the Change of Ownership process?
If you’re unsure of any of the above, then fill out the form that appears below this article or book a call with us here and we can assist you further.
Managing Ownership Transitions with Confidence
The specifics of the Change of Ownership (CHOW) process can vary based on individual circumstances; it's essential to engage with the VA and consult legal or regulatory experts for successful navigation. What's vital is maintaining control of your CHOW process to ensure continuity of care and avoid payment lapses. For comprehensive support and to join a community of over 2,100 providers, consider connecting with Paradigm, who can guide you confidently through this essential transition.
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