AAHomecare Challenges Surety Bond Proposal

WASHINGTON–The American Association for Homecare submitted
comments on Friday calling on CMS to revise its proposed surety
bond rule to target those most likely to pose risks to
Medicare.

Under the Balanced Budget Act of 1997, Congress mandated the
surety bond requirement and CMS attempted to implement it in 1998,
then proposing that providers put up a $50,000 bond. But the rule
was never finalized, so CMS is trying again and has adjusted the
amount for inflation. (See HomeCare Monday, July 30.)

Under the proposed rule, which was published Aug. 1 in the
Federal Register, an HME provider would be required to
obtain a $65,000 surety bond for each of its National Provider
Identification numbers as a condition of enrollment in Medicare.
The rule aims to curb fraud and abuse by ensuring that only
legitimate providers are enrolled in the program.

The proposal has not been embraced by providers. In a
HomeCare Web poll in August, 70 percent of those
participating said the $65,000 bond proposal was a bad idea: 45
percent said they were honest providers but couldn’t afford the
additional costs, and another 25 percent said they thought
government contractors should be held accountable for rooting out
fraud.

While the American Association for Homecare believes that every
effort should be made to eliminate fraud and abuse in the industry,
it also believes that the surety bond would be “more punitive than
effective,” said Walt Gorski, vice president of government
relations.

“Our comments reflect the changing nature of the Medicare
program since surety bonds were [first] called for by Congress in
1997,” he said. “Since that time, Medicare has implemented new
quality standards and accreditation requirements and computer
systems have become far more advanced to root out fraud and abuse.
We believe that CMS must more effectively use the tools that are
currently on the books rather than heap another set of requirements
on suppliers.

“This is why the main thrust of our comments recommend that CMS
apply the surety bond requirement only to new suppliers entering
the marketplace,” Gorski added.

The association is also concerned that the proposed surety bond
will increase providers’ costs and paperwork burden without
accomplishing the goals of the rule. According to a CMS analysis,
the requirement to obtain a bond will cost HME providers
approximately $198 million annually. The additional cost may result
in a drop in the number of providers willing to serve Medicare
beneficiaries, particularly those in rural areas, the analysis
suggests.

“We are very concerned that CMS appears to be using the surety
bond as a claims payment tool rather than an anti-fraud and abuse
mechanism,” Gorski added. “If CMS moves forward with this
regulation, the surety bond should not be tapped until suppliers
have had a chance to appeal earlier denials or determinations. It
should be the last step; it shouldn’t be the first step.”

In its comments, AAHomecare is calling on CMS to revise the
proposed rule as follows:

CMS should exempt providers that have a good track record with
the Medicare program.

• CMS should not impose an inflation adjustment on the amount of
  the bond because reimbursement for HME items since the BBA has
  either been cut or frozen.
• CMS should exempt rural providers and large national chain
  providers. Exempting rural providers, provided they don’t otherwise
  pose risks, will ensure access to care for rural beneficiaries.
  National, publicly traded providers have resources to refund any
  claims payments they receive in error and they are already heavily
  regulated.
• Pharmacies, physicians and other practitioners who bill the
  Medicare program for DMEPOS items should not be exempted from the
  requirement to obtain a surety bond unless they otherwise meet the
  criteria for another exemption.
• A final rule must include a mechanism to protect providers in
  the event that the National Supplier Clearinghouse or a surety
  mistakenly reports that a bond has been cancelled, or the surety
  goes out of business. At a minimum, providers should have notice
  that their billing number will be revoked and an opportunity to
  demonstrate that they have a bond before the revocation.

Read the proposed rule.

Read AAHomecare’s complete comments, visit the association Web
site at www.aahomecare.org.