Bond, Surety Bond

Surety bond companies have two words for home medical equipment providers who haven't obtained the surety bond that will, on Oct. 2, be required to continue doing business with Medicare: "Shop now."

"My recommendation would be that … [providers] do their shopping now. Don't put it off until August or September," advises John Liberty, vice president of Cushman Insurance in Herndon, Va. "Unless they know they have really good credit and/or really strong financials, either corporately or [personally], I certainly would not wait until the last minute to shop around."

In a final rule published Jan. 2, the Centers for Medicare and Medicaid Services mandated that existing DMEPOS providers obtain a $50,000 surety bond by the October deadline in order to renew their NPI, which will allow them to bill Medicare. New providers, those adding locations and those changing ownership were required to obtain the bond by May 4. For enrollment applications submitted on or after May 4, CMS said the NSC will reject the application if the provider does not furnish a valid surety bond. For enrolled providers, failure to submit a bond by Oct. 2 will result in revocation of billing privileges.

The agency is also requiring providers with past “adverse actions,” such as suspension of Medicare billing privileges or revocation of a state license, to add $50,000 to the bond amount for each of those actions.

In establishing the bond requirement, CMS said the agency hoped to stem fraud and abuse and curtail Medicare costs. Its final rule also said CMS expects more than 25,000 HME providers to abandon the Medicare program because of the combined costs of the surety bond and accreditation, which is required by Sept. 30.

Brisk Business

In spite of the predicted provider fallout, representatives of organizations offering DMEPOS surety bonds report steady business.

“We're getting a lot of applications in, and it seems like every day things are picking up more and more,” says Warren Freeman, director of sales and marketing for VGM Insurance in Waterloo, Iowa. The company issued bonds to about 28 percent of those that CMS expected would seek an NPI by May 4, he says. Most of those companies were adding a location, he notes, but there were a number of new providers and some changing ownership.

Freeman believes, however, there are still large numbers of providers who are in waiting mode. “There are a lot of people sitting on the sidelines thinking that October's a long way off, and they're kind of waiting,” he says.

For some, price is the issue.