A four-physician internal medicine group closed on the purchase of a two-physician practice across town on a Friday. On Monday the two physicians saw a full schedule under the new group's name. Their claims went out under the new tax ID the following week. Medicare rejected them because the physicians' reassignments to the new group had not been filed. Three commercial payers rejected them because the new group had no contract. The two physicians generated about $95,000 in charges in their first month and collected almost none of it until late in month three.
Nothing about that was unusual. Practice acquisition billing fails the same way almost every time: the legal and clinical parts of the deal are planned for months, and the enrollment part is discovered the week after closing. Payers pay the tax identification number and provider identifiers they have on file, on the dates they have on file, and nothing else.
This piece is the sequence we use when a practice we support buys, sells or merges: the entity decision that drives everything, Medicare and Medicaid enrollment, commercial contracts, the run-out of the old receivables and a timeline that starts 120 days before closing. Treat it as operational guidance and raise the enrollment consequences of the deal structure with counsel early.
Key takeaways
- An asset purchase creates a new billing entity that must enroll from scratch; a stock or membership-interest purchase keeps the TIN and is reported to Medicare as a change of ownership within 30 days.
- Medicare billing privileges for a new group start no earlier than the date a complete CMS-855B is received, with retrospective billing of up to 30 days, so the application should be in before closing, not after.
- Every physician joining the new TIN needs a reassignment, filed through PECOS or the reassignment section of the CMS-855I, plus updated commercial credentialing and CAQH records.
- Commercial payers rarely backdate contracts, which makes the commercial contracting timeline, not Medicare, the usual cause of the payment gap.
Asset deal or stock deal: the decision that sets the billing work
The first question we ask about an acquisition is how the deal is structured, because the answer determines whether there is one billing entity or two. In an asset purchase, the buyer acquires the practice's assets (charts, equipment, lease, sometimes the name) but not the legal entity; the buyer bills under its own TIN, existing or newly formed. In a stock purchase (or membership-interest purchase for an LLC), the buyer acquires the entity itself, and the TIN, NPI, Medicare enrollment and payer contracts all continue under new owners.
Buyers usually prefer asset deals because they leave the seller's liabilities behind, including any overpayment exposure on the old TIN. The cost of that preference is a full enrollment cycle. A stock deal avoids most of the enrollment work but inherits the history. That is a decision for counsel and the owners; our job is to make sure the enrollment cost is on the table when they make it.
A new legal entity needs an employer identification number from the IRS (Form SS-4, issued the same day online) and a Type 2 NPI from NPPES, the National Plan and Provider Enumeration System, usually issued within a few business days. Physicians keep their individual Type 1 NPIs whatever happens to the entity. If the acquiring group already has a TIN and Type 2 NPI, the work is adding the location and the physicians to its existing enrollments.
Medicare: the CMS-855B, reassignments and the 30-day rule
For a new entity, Medicare enrollment is a CMS-855B (the application for clinics and group practices), submitted through PECOS, plus a CMS-588 for electronic funds transfer to the new bank account. Each physician then reassigns benefits to the new group. Since September 2023 the standalone CMS-855R no longer exists; reassignment is reported inside the CMS-855I or, more practically, as its own action in PECOS, signed by the physician and the group's authorized official.
The timing rule is in 42 CFR 424.520(d): the effective date of billing privileges for physicians and groups is the later of the date the contractor received the application it later approved, or the date the group first furnished services at the new location, and a separate rule allows retrospective billing for up to 30 days before that. In plain terms, the day the MAC receives a complete 855B is the earliest day you can be paid for, give or take 30 days. File four weeks after closing and the first two weeks of claims are lost.
For a stock deal there is no new enrollment, but there is a reporting duty. Under 42 CFR 424.516(d), physicians and groups must report a change of ownership or control within 30 days of the effective date; most other changes get 90 days. Missing the 30-day window is grounds for deactivation, and reactivation means a new application and a new effective date.
One item specific to this spring: CMS posted a revised CMS-855B dated April 29, 2026. MACs accept either version through August 2, 2026 and only the new one from August 3. The revised ownership sections break out direct and indirect ownership and general and limited partners. If your closing is scheduled for late summer, build the application on the new form so it is not returned.
| Deal type | TIN and Type 2 NPI | Medicare action | Deadline or effective date | Commercial action |
|---|---|---|---|---|
| Asset purchase into a new entity | New TIN, new NPI | New CMS-855B, CMS-588, reassignment for every physician | Effective on receipt of a complete application; 30 days retrospective | New group contracts and credentialing for every physician |
| Asset purchase into an existing group | Buyer's existing TIN and NPI | Add practice location on the 855B; reassignment for each incoming physician | Location: 30 days; reassignment effective on receipt | Add location and physicians under the buyer's contracts |
| Stock or membership-interest purchase | Unchanged | Report change of ownership on the 855B | Within 30 days of closing | Notify payers; many contracts require consent to a change of control |
Commercial payers and Medicaid: where the gap really comes from
Medicare's effective-date rule is generous compared with commercial payers. Most commercial contracts have no retroactive provision: the group is in network from the contract effective date, the physician from the credentialing approval date, and earlier claims process out of network or deny as provider not enrolled. Credentialing a physician into a new group takes 60 to 120 days at most plans in our experience, and contracting a brand-new group can take longer because it sits in a network development queue rather than a credentialing queue.
Three things shorten that. First, ask each top payer whether it will assign the seller's existing contract to the new entity rather than negotiating a new one; some will when the physicians and location are unchanged. Second, ask for a continuity-of-care letter of agreement that pays in-network rates while credentialing completes. Third, update and re-attest every physician's CAQH ProView profile with the new location, TIN and group the week the deal is signed, because a stale profile stops the application before a human sees it.
State Medicaid needs its own group enrollment for a new TIN, and each Medicaid managed care plan then credentials separately; in our experience this is the slowest lane and the most often forgotten. Start it the same day as Medicare.
Then there is the plumbing: payer EDI enrollments under the new TIN for claims (837), remittances (835) and eligibility (270/271), plus a W-9 and EFT enrollment for each payer. These take two to four weeks each and are why a credentialed group can still be receiving paper checks in month four.
Running out the old TIN without losing money
Dates of service before closing belong to the old TIN and must be billed under it, with the old group's NPI as billing provider. So the old TIN's Medicare enrollment, payer contracts, clearinghouse connection and bank account all stay open until the receivables are collected. Do not voluntarily terminate the old Medicare enrollment at closing; deactivate it after the last claim is paid or appealed, usually 12 to 18 months later.
The purchase agreement should say who owns the old receivables, who works them, who receives the mail and who issues refunds. Credit balances on the old TIN do not disappear; Medicare's 60-day overpayment rule follows the entity that received the payment. And the old TIN will receive 1099 forms from every payer the following January. We have watched sellers close the old bank account in month two and then spend a year re-issuing refund checks and chasing payer EFTs that bounced.
A worked example of the cash consequence. A two-physician practice collects roughly $95,000 a month, 40 percent from Medicare and Medicaid and 60 percent commercial. If Medicare is filed the day after closing, Medicare cash resumes in about 45 days. If the commercial contracts take 90 days, three months of commercial revenue, about $170,000, is either held or paid out of network. Hold it and you have a cash gap; bill it out of network and the patient owes the difference.
The 120-day timeline
- Day 120 before closing: confirm the deal structure with counsel; obtain the EIN and Type 2 NPI if needed; open the bank account.
- Day 100: request contract assignment or a new contract from every commercial payer above 5 percent of revenue; start Medicaid group enrollment; update CAQH profiles.
- Day 75: submit commercial credentialing for each physician into the new group; ask each payer in writing for a continuity letter of agreement.
- Day 45: submit the CMS-855B and CMS-588 in PECOS as soon as the entity has a lease and a bank account; for a stock deal, prepare the change of ownership filing for closing day.
- Day 30: begin clearinghouse and payer EDI enrollments under the new TIN; set up the new TIN as a separate billing entity in the practice management system.
- Closing day: file the reassignments in PECOS; send W-9s; switch the schedule to the new entity; hold claims for any payer without an effective date.
- Day 30 after closing: review the hold report by payer, chase every pending application weekly, and release claims as effective dates arrive.
A held claim is not a lost claim as long as it is released inside timely filing: 12 months for Medicare, often 90 or 180 days from the date of service for commercial contracts. Put the shortest limit on the hold report so nobody discovers a 90-day payer on day 95. When we manage credentialing and enrollment for a transaction, the hold report and the application tracker are the same spreadsheet, reviewed weekly until it is empty.
Questions we hear
Can the incoming physicians bill under the buyer's group before their reassignments are approved?
For Medicare, the reassignment follows the same receipt-date rule: services from that date forward, and up to 30 days before it, are payable once approved; earlier services are not billable by the group. Billing them under another physician's NPI is misrepresentation, not a workaround. Hold the claims.
We are merging two groups into a brand-new entity. Does either old TIN carry anything over?
No. A new entity is a new enrollment with every payer, even though the physicians and locations are already known to them, and both old TINs then run out separately. Some groups instead fold one practice into the other's existing entity to avoid two run-outs and a new-group contracting queue; that is a decision for counsel and the owners, but the enrollment savings are real.
The seller wants to close the old entity within 60 days of the sale. Is that realistic?
Not if it has receivables, refunds due or payer audits open. The payers will keep paying the old TIN and NPI, so the entity and its bank account have to exist to receive the money. Plan on a year and negotiate who pays for the run-out billing work.
What to do this week
- If a transaction is being discussed, ask counsel now whether it is an asset or a stock deal and write down what that means for the TIN, the NPI and the enrollments.
- Pull every physician's CAQH profile and confirm the attestation is current and no document expires in the next 120 days.
- List every payer above 5 percent of revenue with its credentialing contact, turnaround and timely filing limit; this becomes the hold report.
