HHS Asks for Surety Bond from DME Suppliers

WASHINGTON–HHS announced a proposed rule on Friday to help
limit Medicare’s risk by requiring all DMEPOS providers to supply
CMS with a surety bond.

In a press release about the rule, HHS said it would ensure that
Medicare can recover erroneous payments up to $65,000 that result
from fraudulent or abusive supplier billing practices.

“A surety bond will not only limit Medicare’s risk to fraudulent
billing, but will also help to ensure that only legitimate DMEPOS
suppliers are enrolled in the program,” acting CMS Deputy
Administrator Herb Kuhn said in the statement.

The proposed rule represents another step in an effort to combat
Medicare fraud with particular focus on DMEPOS suppliers, HHS said.
In May, HHS and the Department of Justice announced the
establishment of a multi-agency team of federal, state and local
investigators designed specifically to combat Medicare fraud
through the use of real-time analysis of Medicare billing. (See
HomeCare Monday, May 14.)

The proposed surety bond requirement follows announcements of
two demonstration projects, one requiring that DMEPOS suppliers in
South Florida and Southern California reapply to Medicare in order
to maintain their billing privileges. The other demonstration
requires home health agencies in the Houston area and Southern
California to reapply.

The proposed rule implements section 4312 of the Balanced Budget
Act of 1997, according to the release. The rule would require all
DMEPOS suppliers, except those that are government-operated, to
obtain and retain a $65,000 surety bond. HHS said that amount is an
inflation-adjusted figure from the $50,000 surety bond amount
proposed in the 1997 Act.

Earlier on Friday, CMS also issued a notice that it was
extending the bidding window for DMEPOS competitive bidding for an
additional 60 days. (See “CMS Extends Bid Window after Legislators Bring
Full-Court Press” in this issue.) The extension was granted to
allow suppliers additional time to consider their bid submissions
and have the opportunity to update their bids based on this new
proposal, HHS said.

The proposed rule also asks for comments on:
–reasons to increase the surety bond amount for higher-risk
suppliers, and the appropriate period of time that higher amount
should be required;
–appropriate criteria to identify whether a physician or
non-physician practitioner should be given an exception to the
surety bond requirement; and
–establishing an exception to the surety bond requirement for
licensed pharmacists and large, publicly traded chain
suppliers.

To view the proposed rule, click here.