Applications Surge at Bond Deadline; Big ‘Oops’ for Some
ATLANTA—With an Oct. 2 deadline looming and hopes dimming
for exemptions and/or a delay of CMS’ surety bond
requirement, surety companies are seeing an influx of applications,
they said this week.
As of Aug. 27, the National Supplier Clearinghouse reported that
81,288 supplier locations did not have surety bonds. Carriers
surmised that providers have been waiting to purchase the bonds in
hopes that CMS would eliminate the requirement or delay its
implementation date. Pharmacies carrying DMEPOS items have also
been working through legislative and regulatory channels
in hopes of being
exempted from the mandate.
But with days left prior to implementation, applications are
surging, according to several companies.
“Some days, we literally have hundreds of
applications,” said Warren Freeman, director of sales and
marketing for VGM Insurance in Waterloo, Iowa.
And while Freeman and other carriers said they should be able to
process all the current applications by the deadline, they
cautioned that those who are still stalling or shopping around for
the best deal are risking their Medicare business.
“At some point, we are going to have to turn this
off,” Freeman said about the application system. Because of
the increase in volume, he said, his company’s minimum
turnaround time has doubled or tripled. Earlier, it could take as
little as 24 hours to get a bond; these days, it is a minimum of 48
or 72 hours.
Cole Cushman, vice president of Cushman Insurance, Herndon, Va.,
said although traffic has picked up, his company has so far been
able to keep up with the applications. It usually takes three to
seven days for the whole transaction, he said (the bond is not
issued until payment has been received). However, he expects
applications will continue to increase.
CMS has said it will revoke billing privileges for DMEPOS
providers who do not have surety bonds by the deadline, and those
providers will not be able to reenroll in Medicare for a year.
Providers who voluntarily withdraw can reenroll once they meet all
the program requirements, which include having a $50,000 surety bond for each NPI
number.
“If [providers] wait, they might lose their billing
privileges,” Cushman said.
“If they are waiting, they shouldn’t be,”
added Sue Mairena, COO of the American Association for Homecare,
which is offering surety bonds through Aon Affinity Insurance
Services in Chicago. “After [Sept. 30], there’s no
chance of getting a bond. And that’s saying that all your
financials are in order—and that’s a big
risk.”
Indeed, said Cushman, it may already be too late for
some. “We are seeing a lot that cannot qualify at this
time,” he said. “It seems a lot of [providers] have
waited until the last second, and their financials may not be as
strong as they should be.”
Freeman also said his company has had to deny people because of
no credit history “or their credit was so
poor.”
Carriers said the cost of each bond is largely predicated on
credit history and personal credit scores. Although CMS predicted
that providers would pay about $1,500 per bond, marketplace
competition has brought the price down as low as $250 for those
whose financials are strong. However, the greater the risk, the
more costly the bond, and “everybody is not going to get a
$250 bond,” Cushman said.
That has led some providers to shop around, a practice that
could be harming their credit scores, Cushman pointed out.
“It doesn’t seem like a lot of people are aware that
personal credit scores are pulled, and if they are shopping 10
different companies for a surety bond, then that has an effect on
your credit rating,” he said.
For providers with poor credit scores or iffy financials,
Freeman has some advice: “This is not the time to shop
around. If someone makes them an offer, they just need to accept it
and get the bond.”
Big Oops for Some
But getting the bond isn’t the end of the story.
Providers—not the carriers—must send the original or a
copy of the bond to the NSC along with the CMS 855S form.
“It’s their job to file that with the NSC,”
said Freeman. He’s not sure all providers are aware of that
step, which could explain at least some of the locations the NSC
said haven’t yet gotten a bond.
“Are people filing these bonds or are they not getting it?
Do they fall into ‘Oops, I haven’t gotten it yet’
or ‘Oops, I haven’t filed it yet?’ Both of those
are pretty big oops,” Freeman said.
To guard against providers simply filing the bonds away, Freeman
said, his company sends along a bright orange instruction sheet and
advises clients to send the bonds by certified mail or UPS to
ensure that the NSC receives them.
It’s imperative that clients check over the bonds, he
said.
“Everybody needs to make sure that all the t’s are
crossed and the i’s are dotted and everything is in
place,” he said.
The NSC has already dealt with some attempts by unscrupulous
companies to send in bogus bonds, Freeman said, noting, “by
allowing copies, you open the door for more fraud to happen. I
don’t think it is a huge issue, but I know there has been
some fraud that has happened.”
To avoid that, the agency is scrutinizing each bond and form,
Freeman said. Some bonds have been kicked back for even minute
discrepancies, such as absence of a suite number or a name that
isn’t capitalized.
Rose Schafhauser, executive director of the Midwest Association
of Medical Equipment Services and a member of the National Supplier
Clearinghouse Advisory Committee, added that providers also must
make sure they are sending the NSC the correct bond with their CMS
855S form.
“[The NSC] did indicate they were denying some of the
bonds because some people sent in their bonds for Medicaid,”
Schafhauser said.
The NSC does allow the corrected bonds to be reissued or the
correct bonds to be sent, but all of that takes time—and
there is little of that left.
Indeed, Freeman and others are concerned that many providers
will fall by the wayside.
“A lot of people on Medicare are going to try to go to
their provider after Oct. 2 and they aren’t going to be able
to get their equipment or their diabetic supplies or some of the
drugs that are listed under DME,” he said.
For some providers, it will be a choice. “Some clients
have decided it’s not worth it to bill Medicare,”
Cushman said. Some will get out of the Medicare business; others
will close their doors on Oct. 2.
That won’t be a surprise to CMS. In its final rule, the
agency said it expects more than 25,000 HME providers to abandon
the Medicare program because of the combined costs of the surety
bond and the DMEPOS accreditation requirement; that deadline is
Oct. 1.
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