Learn more about Medicare surety bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Medicare Bonds?
Medicare bonds are surety bonds required by the Centers for Medicare and Medicaid Services (CMS) as a preventive measure against medical billing fraud, specifically fraudulent billing for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Providers of DMEPOS must obtain a Medicare bond as a prerequisite for participating in the Medicare program and billing Medicare. (CMS has a similar Medicaid bond requirement for becoming a Medicaid participant.)
A Medicare surety bond protects the Medicare program by guaranteeing reimbursement for any financial losses stemming from fraudulent billing and other unlawful business practices.
Who Needs Them?
All but certain exempted DMEPOS suppliers are required to purchase a Medicare bond—namely, physical and occupational therapists who operate their businesses as sole proprietors, providing DMEPOS items only to their own patients, and billing Medicare for only orthotics, prosthetics, and supplies. The bond requirement applies to all other suppliers and providers that bill Medicare for DMEPOS, including nursing homes and pharmacies.
Note that DMEPOS requirements now apply to dentists as well.
Certain DMEPOS suppliers are required to obtain more than the standard $50,000 bond amount. For one thing, the $50,000 amount applies to each location a supplier operates that has its own National Provider Identifier (NPI). So, suppliers with multiple locations can purchase one Medicare bond, but the required bond amount will be $50,000 multiplied by the number of locations.
Additional coverage is also required if the supplier has been subject to adverse legal or disciplinary action within the ten years preceding enrollment as a Medicare provider. This applies in cases that involve:
The loss of Medicare billing privileges
The suspension or permanent loss of a professional license or accreditation
Being convicted of a felony
Exclusion from a healthcare program operated by the federal or state government
How Do They Work?
The CMS is the obligee in the bond contract, the DMEPOS supplier is the principal, and the underwriter issuing the bond is the surety. CMS may file a claim against the Medicare bond of a principal that has submitted a fraudulent bill for DMEPOS items or has otherwise violated the terms of the bond. The surety will pay any valid claims, but will then seek repayment from the principal.
What Do They Cost?
The premium is a small percentage of the required bond amount, which is a minimum of $50,000 (and potentially more, as noted above). For applicants with good credit, the premium rate may be as low as half of one percent, but those with poor credit will likely pay a higher percentage.
If you’re a DMEPOS supplier seeking a Medicare bond, our experienced surety professionals are ready to help you.
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