Transferring DHS Licenses and Certifications

Buying or selling a business can be an involved process, especially when there are licenses and certifications attached to the business that allow it to generate income. 

DHS issues both certifications and licenses and although both require detailed applications, certifications have an easier and different process than licenses when transferring them. This article covers the licenses that Holt Law offers services for in the transferring and change of ownership process. Click here for a detailed list of services offered through Holt Law. 

 

Certifications—Which providers are certified?

• Adult Rehabilitative Mental Health Services (ARMHS)
• Housing Stabilization Services (HSS)
• Early Intensive Development and Behavioral Intervention (EIDBI)
• Children’s Therapeutic Services and Supports (CTSS)
• Case Management 

 

Why might you need to change your certification?

You may need to change your certification if there has been a: 

• Sale or transfer of direct ownership;
• Sale or transfer of indirect ownership; or
• Transfer of ownership among current owners. 

 

How to Change a Certification for Adult Rehabilitative Mental Health Services (ARMHS) 

1. Fill out the DHS-5550 and DHS-4138 found in your online MN-its portal.
2. Complete and submit to DHS the MPSE Enrollment and Global Request Form to disclose the new ownership. The new ownership does not need to be updated with the specific DHS department for your certification.
3. A new onsite visit will occur for the ARMHS program. 

 

How to Change a Certification Housing Stabilization Services (HSS)

1. Fill out the DHS-5550 and DHS-4138 found in your online MN-its portal.
2. Complete and submit to DHS the MPSE Enrollment and Global Request Form to disclose the new ownership. The new ownership does not need to be updated with the specific DHS department for your certification.
3. A new onsite visit will occur for the HSS program. 

 

How to Change a Certification for Early Intensive Developmental and Behavioral Intervention (EIDBI)

1. Fill out the DHS-5550 and DHS-4138 found in your online MN-its portal.
2. Complete and submit to DHS the MPSE Enrollment and Global Request Form to disclose the new ownership. The new ownership does not need to be updated with the specific DHS department for your certification.
3. A new onsite visit will occur for the EIDBI program. 

 

How to Change a Certification for Children’s Therapeutic Services and Supports (CTSS)

1. Fill out the DHS-5550 and DHS-4138 found in your online MN-its portal.
2. Complete and submit to DHS the MPSE Enrollment and Global Request Form to disclose the new ownership. The new ownership does not need to be updated with the specific DHS department for your certification.
3. A new onsite visit will occur for the CTSS program. 

 

How to Change a Certification for Case Management

1. Fill out the DHS-5550 and DHS-4138 found in your online MN-its portal.
2. Complete and submit to DHS the MPSE Enrollment and Global Request Form to disclose the new ownership. The new ownership does not need to be updated with the specific DHS department for your certification.

 

Licenses—Which providers are licensed?

• 245D/Waiver License
• Intensive Residential Treatment Services (IRTS) & Residential Crisis Stabilization (RCS)
• Mental Health Clinics (245I.20)
• Adult Day Center (Minn. Rules 9555.9600-9555.9730)
• Integrated Community Supports (ICS)
• Substance Use Disorder Treatment (245G)

 

License Transfers– 

What Constitutes a Change in Ownership (CHOW)?

 

A change in ownership is when one of the following happens:

• The license holder sells or transfers 100% of the property of the company, its stock, or its assets. 
• The license holder merges with another organization.
• The license holder merges with two or more organizations, creating a new organization. 
• There is a change to the federal tax ID number linked with the license holder.
• All controlling individuals that were on the original application for DHS licensure have changed. 

It is not considered a change in ownership if at least one controlling individual has been listed as a controlling individual for the license for at least the last 12 months. 

DHS has a helpful form to assist in determining for licensing purposes if there has been a change of ownership for your program.  Click here for the Change of Ownership Worksheet form.

 

What is a Controlling Individual?

 

An owner of the program, officers of the program, such as the CEO or CFO, a managerial official of the program, and a compliance officer for the program are all considered “controlling individuals” according to DHS. 

Owners of the program: A controlling individual is anyone who owns at least 5% or more of the program. This can be either direct or indirect ownership and will include the individual who was designated as the authorized agent when the original application was submitted for the program. 

Managerial officials of the program: Anyone who has the authority to make decisions about the overall management and operation of the program would be considered managerial officials. These people’s tasks include creating program policies, approving policies, managing employees, and making decisions regarding the ongoing direction of the program. Just because someone’s role includes writing policies or managing employees does not make them a managerial official because they do not have an ownership interest in the program. These people are the ones who oversee the program, above a site director or program manager. 

Compliance officer for the program: If the program is enrolled as a Medical Assistance provider, then the person who has been appointed as the compliance officer is also considered to be a controlling individual.

Officers of the Program: Anyone who has a title that categorizes them as an officer of the program, such as president, CEO, or CFO. 

Authorized Agent: When the initial application is submitted, it must be signed by the authorized agent. This is the person who is authorized to accept service on behalf of all the controlling individuals. 

 

What is the Process to Transfer a DHS License for 245D, IRTS/RCS, Mental Health Clinics, Adult Day Centers, ICS, and 245G Programs?

According to Minn. §245A.043, DHS licenses cannot be transferred or assigned. However, when there is a change of ownership in a company, the parties can either transfer ownership over a 12 month period and submit paperwork to DHS of the ownership change, or the new party can submit a new license application and then submit paperwork to DHS to notify them of the change once the application is approved, so for all intents and purposes, it is similar to a transfer. 

There are two options when there is a change in ownership of a 245D licensed program. Option #1 requires less paperwork, but the entire process takes 12 months, or longer, because the new owner must be on the license for 12 months before the former owner can be removed. Option #2 can take less time, but requires quite a bit more paperwork to be submitted to DHS. Here is a basic breakdown of the steps to transfer a 245D license:

 

Option #1

1. Request a Change in License Form (CLIF) from your assigned DHS licensor. Complete it and submit back to DHS licensor.  
2. After the CLIF form is filled out and accepted by your 245D licensor, go onto your MN-its account and complete a Global Request Form to disclose the change in ownership. The portal will prompt you to upload completed DHS-5550 and DHS-4138 forms. 
3. For the 245D change of ownership, one owner/license holder must maintain at least 5% ownership as a controlling individual on the license for 12 months until the new owner/license holder can become a 100% owner/license holder of the program. So, up to 95% of the business can be purchased by the buyer, but the seller will remain as a 5% owner for one year.
4. During the 12 month period, both owners will be listed on the license, therefore both owners are expected to operate the program according to the DHS licensure guidelines. 
5. After the 12 month period, the buyer can purchase the remaining percentage of what the seller had retained. 
6. After 12 months, the same process will occur in which a Change in License Form (CLIF) is requested from your assigned DHS licensor.  
7. After the CLIF form is accepted, one of the license holders will go into MN-its and complete another Global Request Form. A DHS-5550 and DHS-4138 form will also need to be filled out and submitted, found in the portal. 

 

Option #2

1. The current license holder and the future owner of the program must complete the Change in Ownership Information (CHOW) form and submit it to the program’s assigned DHS licensor. This must be done at least 60 days before the date in which the change in ownership is planned to occur. DHS recommends submitting the form as early as possible. 
2. The future owner of the program must submit a complete application for the DHS 245D license. If there will be less than 60 days of interrupted services provided by the program, the new applicant does not need to submit a letter of need. Again, DHS recommends that the application be submitted as early as possible. 
3. The current license holder will solely operate the program until the new license holder is granted a license and the transfer and sale of the program is complete. 
4. If both parties request it in writing, DHS may approve a temporary change in license while the new application is being reviewed. If a temporary change in license is granted, both parties operate the program with the current license and the temporary license, according to all applicable state laws and rules. 
5. Once the new license holder is granted a license, a DHS-5550 form and a MHCP Provider Agreement form must be submitted through the Minnesota Provider Screening and Enrollment (MPSE) portal to notify DHS of the sale and transfer.