A Texas home health or hospice license (an HCSSA license) cannot be transferred. If the sale changes the license holder's federal tax ID, as an asset sale to a new company does, Texas treats it as a change of ownership (CHOW). The buyer files its own license application with HHSC at least 30 days before the sale, and the seller must keep its license active until HHSC issues the buyer's license. If the agency bills Medicare, both sides file enrollment applications with CMS before the change closes. And if majority ownership changed within 36 months of the agency's initial Medicare enrollment or its last majority change, the provider agreement may not convey at all unless an exception applies.
- Texas defines a CHOW by a change in the license holder's federal tax ID, not by a percentage of ownership.
- File the buyer's complete application at least 30 days before the anticipated sale date.
- The seller's license stays active until HHSC issues the buyer's license, then becomes invalid.
- Under Medicare rules, a stock transfer is not a CHOW of a corporation, but the 36-month rule still counts stock transfers.
- Check the initial Medicare enrollment date and every prior ownership change before you price the deal.
What Texas counts as a change of ownership
Texas licenses home health, hospice and personal assistance services under one framework: the Home and Community Support Services Agency (HCSSA) rules in 26 Texas Administrative Code Chapter 558. Hospice is one of the license categories, alongside licensed home health, licensed and certified home health, and personal assistance services (26 TAC 558.13(b)). The same change of ownership rules apply to each.
The test is simple and often misunderstood. Under 26 TAC 558.2, a change of ownership is an event that results in a change to the federal taxpayer identification number of the license holder. There is no percentage threshold. If a new company buys the agency's assets, the license holder changes, the tax ID changes, and it is a CHOW. If a buyer purchases the stock or membership interests and the same entity keeps its tax ID, it is not a CHOW under Texas rules. That kind of change is still reportable: HHSC requires notice of a change in controlling person within 7 days (26 TAC 558.218), and a name change is also a 7-day report (26 TAC 558.215).
License timing: the seller keeps the license until the buyer's issues
A license holder may not transfer its license (26 TAC 558.23(a)). The buyer applies for its own license, and HHSC treats a CHOW application as an application for an initial license (26 TAC 558.11(c)). Applications are filed through HHSC's online licensing portal, TULIP.
The timing rules are what protect continuity of care and cash flow:
- The buyer must submit a complete application, with all fees, at least 30 days before the anticipated date of sale (26 TAC 558.25(1)). HHSC may accept a later filing with a late fee.
- For the agency to operate without a gap, the seller must maintain an active and valid license until HHSC grants and issues the buyer's license (26 TAC 558.23(b)).
- The seller's license becomes invalid on the licensure CHOW date, which is the effective date of the buyer's new license (26 TAC 558.23(a) and 558.25(3)).
- Each branch office and alternate delivery site needs its own application and fee (26 TAC 558.23(c)).
- HHSC conducts an on-site inspection after issuing a CHOW license, and may do a desk review instead in limited cases, such as when less than 50 percent of the direct or indirect ownership changed (26 TAC 558.23(d)).
HHSC's provider page says it may take up to 45 days to process a complete application. In practice, that means the purchase agreement should tie closing to license issuance, not to a fixed calendar date. One more timing note: HHSC published proposed amendments to 26 TAC 558.23 and 558.25 in the September 18, 2026 Texas Register, addressing operation between the ownership change and license issuance and the documents a complete application needs. Check with HHSC whether those amendments have been adopted before you sign.
Medicare: CHOW, assignment and CMS-855A filings
If the agency is Medicare certified, federal change of ownership rules apply on top of the Texas rules (26 TAC 558.23(e)). Under 42 CFR 489.18(a), a CHOW includes the removal, addition or substitution of a partner, the transfer of title and property by a sole proprietor, and the merger or consolidation of a provider corporation. The same regulation says the transfer of corporate stock, or a merger of another corporation into the provider corporation, does not by itself constitute a change of ownership.
When there is a Medicare CHOW, the existing provider agreement is automatically assigned to the new owner (42 CFR 489.18(c)), together with its terms, including any existing plan of correction (42 CFR 489.18(d)). CMS's Program Integrity Manual explains that a new owner may reject assignment, but then it enrolls as a new provider and needs a survey, which means a period without Medicare billing.
On paperwork, 42 CFR 424.550(b) requires the current owner and the prospective new owner to complete and submit enrollment applications before completion of the change of ownership. For institutional providers such as home health agencies and hospices, that is the CMS-855A. If the new owner does not submit its application within 30 days of the change, CMS may deactivate the billing number. Changes of ownership or control must be reported within 30 days under 42 CFR 424.516(e)(1).
The 36-month rule, and its four exceptions
This is the rule that most often surprises sellers of newer agencies. Under 42 CFR 424.550(b)(1), if there is a change in majority ownership of a home health agency or hospice by sale within 36 months after the effective date of its initial Medicare enrollment, or within 36 months after its most recent change in majority ownership, the provider agreement and Medicare billing privileges do not convey to the new owner. The buyer must instead enroll as a new agency and obtain a state survey or accreditation from an approved accrediting organization. The rule expressly covers asset sales, stock transfers, mergers and consolidations, so a stock deal does not avoid it.
A change in majority ownership means an individual or organization acquires more than a 50 percent direct ownership interest during the 36-month window, including through the cumulative effect of several sales or transfers (42 CFR 424.502). Hospices were added to the rule in the CY 2024 home health final rule (88 FR 77878, November 13, 2023).
The regulation lists four exceptions (42 CFR 424.550(b)(2)):
- The agency submitted 2 consecutive years of full cost reports since initial enrollment or the last change in majority ownership, whichever is later. Low or no utilization cost reports do not count.
- The agency's parent company is undergoing an internal corporate restructuring, such as a merger or consolidation.
- The owners are changing the existing business structure (for example, from an LLC to a corporation) and the owners remain the same.
- An individual owner dies.
If your agency is inside the window and no exception fits, the deal is still possible, but it is a different deal: the buyer prices in a new enrollment, a survey and a period without Medicare revenue.
Texas Medicaid and managed care
If the agency is enrolled in Texas Medicaid, 1 TAC 352.21 requires the provider to notify HHSC or its designee of a change of ownership within 30 days. HHSC may require a new enrollment application and provider agreement, and if a change is not reported, HHSC may disenroll the provider, deny payment and recoup payments back to the date the change should have been reported. Managed care organization contracts and credentialing have their own change of ownership terms. Read each contract and confirm the process with each plan before closing.
What buyers will diligence
These are general practice points, not rules, but serious buyers and their lenders ask for all of them:
- The initial Medicare enrollment effective date and a history of every ownership change, to test the 36-month rule.
- Cost reports filed, and whether any were low or no utilization.
- Survey and accreditation history, and any open plan of correction, which carries over on assignment.
- Medicare and Medicaid audit exposure and any overpayment demands.
- The entity and tax ID structure, which decides whether the deal is a Texas CHOW at all.
- Branch and alternate delivery site licenses.
- Administrator and supervising nurse qualifications, and who stays after closing.
- Payer mix, referral sources and concentration.
How Delta takes the licensing risk out of the closing
Delta Brokers is a sell-side business broker based in McAllen. On a licensed healthcare sale, we map the license and enrollment path before we go to market: whether the deal is a Texas CHOW, where the agency sits on the 36-month clock, what each payer contract requires, and how the closing date should track license issuance. Then we screen buyers for the ability to clear those steps. We are not a law firm, so we work alongside your healthcare counsel, who should draft the purchase agreement and confirm each filing. See also asset sale vs. stock sale and healthcare businesses we sell.
Talk to us before you sign a letter of intent
A free, confidential consultation with a Delta partner. We will map the licensing, transfer and financing steps for your business and tell you plainly where the closing risk sits.
This guide is general information, not legal advice. Delta Brokers is a business brokerage, not a law firm, and nothing here creates an attorney-client relationship. Rules and agency practice change; confirm every requirement with the agency named and with your own attorney before you act. Last reviewed November 12, 2026.
Sources
Primary sources reviewed November 12, 2026- 26 TAC 558.2, Definitions (Cornell LII mirror of the Texas Administrative Code)
- 26 TAC 558.11, Licensure
- 26 TAC 558.23, Change of Ownership
- 26 TAC 558.25, Application Procedures for a Change of Ownership
- Texas Register, September 18, 2026, Proposed Rules, Title 26
- HHSC, Home and Community Support Services Agencies (HCSSA)
- HHSC, Changing Provider Information (HCSSA)
- 1 TAC 352.21, Medicaid provider notification of changes
- 42 CFR 489.18, Change of ownership or leasing (eCFR)
- 42 CFR 424.550, Prohibitions on the sale or transfer of billing privileges (eCFR)
- 42 CFR 424.502, Definitions (eCFR)
- 42 CFR 424.516, Additional provider and supplier requirements (eCFR)
- CMS, Medicare Program Integrity Manual, Chapter 10
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