Form Cms-855a - Medicare Enrollment Application - Institutional Providers Page 27
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54SECTION 5: OWNERSHIP INTEREST AND/OR MANAGING CONTROL INFORMATION
(ORGANIZATIONS)
(Continued)
• Company A owns 100% of the Enrolling Provider
• Company B owns 40% of Company A
• Company C owns 60% of Company A
• Individual X owns 5% of Company C
• Individual Y owns 30% of Company B
In this example, Company A (Level 1) is the direct owner of the provider identified in section 2
of this application. Companies B and C, as well as Individuals X and Y, are indirect owners of the
provider. To calculate ownership shares using the above-cited example, utilize the following steps:
LEVEL 1
The diagram above indicates that Company A owns 100% of the Enrolling Provider. Company A
must be reported.
LEVEL 2
To calculate the percentage of ownership held by Company C of the Enrolling Provider, multiply:
• The percentage of ownership the LEVEL 1 owner has in the Enrolling Provider
MULTIPLIED BY
The percentage of ownership the LEVEL 2 owner has in that LEVEL 1 owner
• Company A, the LEVEL 1 (or direct) owner, owns 100% of the provider. The diagram also
indicates that Company C, a LEVEL 2 owner, owns 60% of Company A. As such, multiply
100% (or 1.0) by 60% (.60). The result is .60. Therefore, Company C indirectly owns 60% of
the provider, and must be reported.
• Repeat the same procedure for Company B, the other LEVEL 2 owner. Because Company B
owns 40% of Company A, multiply this figure by 100% (again, the ownership stake Company
A has in the Enrolling Provider). Company B thus owns 40% of the Enrolling Provider, and
must be reported.
This process is continued until all LEVEL 2 owners have been accounted for.
LEVEL 3
To calculate the percentage of ownership that Individual X has in the Enrolling Provider, multiply:
• The percentage of ownership the LEVEL 2 owner has in the Enrolling Provider
MULTIPLIED BY
The percentage of ownership the LEVEL 3 owner has in that LEVEL 2 owner
• Company C owns 60% of the provider. According to the example above, Individual X (Level
3) owns 5% of Company C. Therefore, multiply 60% (.60) by 5% (.05), resulting in .03. This
means that Individual X owns 3% of the provider and does not need to be reported in this
application.
• Repeat this process for Company B, which owns 40% of the provider. The diagram states that
Individual Y (Level 3) owns 30% of Company B. We thus multiply 40% (.40) by 30% (.30).
The result is .12, or 12%. Because Individual Y owns 12% of the provider, Individual Y must be
reported in this application (in Section 6: Individuals).
This process is continued until all owners in LEVEL 3 have been accounted for. This process must
be repeated for Levels 4 and beyond.
CMS-855A (07/11)
26
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