Group asks CMS to set guidelines for making surety bond claims

WASHINGTON, June 21, 2012—An HME industry working group has asked the Centers for Medicare & Medicaid Services (CMS) to add practical guidelines for making claims on surety bonds. At issue is a recent decision by CMS to start making unannounced claims on surety bonds to collect relatively small overpayments from providers.

The working group—which includes AAHomecare, Bond Safeguard, Lexon Surety, The Wayne van Halem Group, US Rehab, VGM and VGM Insurance Group—made the following recommendations last week:

• Only allow DME MACs to trigger a surety bond if a threshold dollar amount is reached.
• Provide better notice to HME providers when a surety bond is about to be triggered.
• Give surety bond companies more time to notify HME providers that their bonds are about to be triggered so the provider can take corrective action.

AAHomecare reported that some HME providers were receiving notices from surety companies that DME MACs were making claims on surety bonds to collect overpayments as low as $16.

“If the program continues in its current form, there is great concern that surety bonds will become very hard to underwrite, forcing surety companies to exit this line of business, thus reducing the supply of surety bonds,” the working group stated. “That would drive up the cost to an amount not manageable for the typical home medical equipment (HME) provider.”

The group stressed that the surety bond program was originally intended to deter fraud by ensuring the legitimacy of HME providers. Surety bonds should not be used to routinely collect overpayments, the group said.