New York clarifies Medicaid moratorium and ownership changes

Following the publication of McDermott Will & Schulte’s August 4, 2026, client alert, the New York State Department of Health (DOH) announced that it had received approval from the Centers for Medicare & Medicaid Services (CMS) to implement a plan (the DOH Medicaid Plan) to revamp New York’s Medicaid provider enrollment and revalidation processes in order to improve oversight of the New York Medicaid program.

The DOH Medicaid Plan contains information regarding, among other things, new risk designations for certain types of providers, a new Medicaid revalidation process, and the moratorium on Medicaid enrollment for certain types of providers.

Provider risk designation/Medicaid revalidation

New York has implemented staggered revalidation timelines based on the risk level associated with the type of provider. Providers that are designated as being “high risk” are subject to Medicaid revalidation every three years. Providers at “moderate risk” are subject to Medicaid revalidation every four years, and those considered “low risk” are subject to Medicaid revalidation every five years.

Under the DOH Medicaid Plan, all Medicaid providers will be subject to revalidation over the course of the next two years in connection with the rollout of the Provider Services Portal. After this revalidation, Medicaid providers will be subject to revalidation every three, four, or five years depending on their given risk designation, as set forth above. Entities designated as applied behavior analysis (ABA) providers, Section 1915(c) home and community-based services (HCBS) providers, or licensed home care services agencies (LHCSAs) are now considered high risk providers subject to revalidation every three years.

Medicaid enrollment moratorium/changes in ownership

The DOH Medicaid Plan confirms that the DOH is implementing a Medicaid enrollment moratorium for laboratory; durable medical equipment; prosthetics, orthotics, and supplies (DMEPOS); ABA; pharmacy; LHCSA; and managed long-term care plan providers. The duration of the moratorium is not set forth in the DOH Medicaid Plan, but it has been reported that the moratorium is expected to last for at least six months.

The DOH Medicaid Plan explicitly references the Medicare home health agency (HHA) and hospice moratorium regulation, which framework will be applied to the New York Medicaid classes of providers subject to the New York Medicaid moratorium. As described by the plan, the Medicare moratorium requires applicable providers to re-enroll as a new provider when undergoing a “change in majority ownership,” or “CIMO,” within 36 months of its initial enrollment or most recent CIMO. The post-closing entity is considered a “new provider” or “new supplier” that is subject to the applicable federal moratorium (i.e., cannot apply for enrollment).

The Medicare moratorium defines a “change of majority ownership” in the following way:

Change in majority ownership occurs when an individual or organization acquires more than a 50 percent direct ownership interest in an HHA or hospice during the 36 months following the HHA’s or hospice’s initial enrollment into the Medicare program or the 36 months following the HHA’s or hospice’s most recent change in majority ownership (including asset sale, stock transfer, merger, and consolidation). This includes an individual or organization that acquires majority ownership in an HHA or hospice through the cumulative effect of asset sales, stock transfers, consolidations, or mergers during the 36-month period after Medicare billing privileges are conveyed or the 36-month period following the HHA’s or hospice’s most recent change in majority ownership.

The plan indicates that New York is applying this CIMO framework to qualifying New York Medicaid providers, such that any provider or supplier within a qualifying category “that undergoes a change in majority ownership” that triggers re-enrollment will be treated as a new applicant and will not be permitted to enroll until the applicable moratorium is lifted.

The plan does not indicate whether any specific structures or guidance for the Medicare moratorium would necessarily be carried into the Medicaid moratorium, other than that the moratorium will result in certain Medicaid providers who undergo a change in majority ownership losing their Medicare enrollment.

Analysis

Generally, the Medicare enrollment moratorium applies only to qualifying providers that undergo a direct change in majority ownership. It does not apply to qualifying providers who undergo an indirect change in majority ownership. While the DOH Medicaid Plan does not expressly incorporate this Medicare moratorium structure, its silence and general reference to the Medicare moratorium suggests that the DOH may take the same approach with respect to changes of majority ownership over New York Medicaid providers and suppliers subject to the New York Medicaid moratorium (i.e., the New York Medicaid moratorium would not prevent enrolled Medicaid providers undergoing an indirect change in majority ownership from re-enrolling). However, it remains to be seen whether New York Medicaid adopts this Medicare moratorium approach.

Moreover, while the DOH Medicaid Plan indicates that New York is applying its moratorium to changes of majority ownership, the New York Medicaid change of ownership process applies to even transfers of minority ownership. Providers and investors should not assume that minority ownership transfers will not be subject to delays, notwithstanding the DOH Medicaid Plan’s reference to the Medicare moratorium that is limited to changes in majority ownership interests.

Parties considering a transaction involving the sale of a provider that is subject to the Medicaid enrollment moratorium should consider options to structure the transaction to avoid potentially entering into any transaction that would result in a change in majority ownership of the provider, given that the consummation of such transaction could result in the provider being barred from participating in the New York State Medicaid program during the moratorium period. The DOH Medicaid Plan suggests that indirect or minority transfers may not be subject to the moratorium, and providers and investors may consider limiting transaction structures to those involving indirect or minority ownership changes. However, it is possible that such structuring will not prove sufficient to prevent triggering the moratorium; such potential outcome should be appropriately contemplated by the parties to the transaction.

We will continue to monitor implementation of both the revalidation initiative and the enrollment moratorium and provide updates as additional guidance becomes available.