Surety Bond Deadlines Firm, but Questions Remain

BALTIMORE—CMS said last week the deadlines for DMEPOS
providers’ surety bonds would be enforced as set out in its
final rule on the new requirement–even though the agency has yet
to pass on full details about its bond requirements to the surety
industry or to those who must purchase the bonds.

During a Special Open Door Forum Tuesday, the agency’s
Frank Whelan went over provisions of the final rule, published in
the Jan. 2 Federal Register. The rule requires providers
applying for Medicare enrollment and those changing ownership or
opening a new location to have a bond in place by May 4. And by
Oct. 2, all HME providers participating in Medicare will need
surety bonds for at least $50,000 per NPI number. (For more, see
“AAHomecare, VGM to Offer Surety Bonds,”
Jan. 12.)

Whelan said the National Supplier Clearinghouse will reject a
pending provider’s enrollment application if a bond has not
been submitted by May 4. For any application submitted on or after
May 4, the NSC will reject the application if the provider does not
furnish a valid surety bond at the time it submits an
application.

For enrolled providers, Whelan said, failure to submit a bond by
Oct. 2 “will result in revocation of the supplier’s
billing privileges.”

According to providers and surety company representatives
calling in to the teleconference, however, CMS has not yet released
the exact language required for a bond to surety bond issuers.
“The bottom line is there is no standard, one-size-fits-all
federal government-approved bond form that has been created,”
Whelan said, although he noted there are specific items that a bond
must cover and certain terms that must be included in a bond, and
those are given in the final rule.

Whelan also said CMS plans to issue an MLN Matters article on
the bond requirement and would post surety bond FAQs for providers
and bond companies on its Web site.

But several teleconference listeners emphasized the late
date.

“The May 4 deadline is rapidly approaching and there has
been a tremendous amount of questions from the provider community
as well as those that have to provide the bond itself, so
we’d like to get some sense of when we might expect specific
answers on some of these questions,” one caller
commented.

“The FAQs will be posted any day now,” Whelan
responded. “This will be the first batch of FAQs, and they
will be updated on a regular basis. While I do understand your
concern about this, we also believe it’s important that we provide
consistent answers to the supplier community. We’ll try to do
so as rapidly as we can, but we want to make sure that everybody is
on the same page.”

Another caller from Michigan said her company had been trying
“to find someone to do a surety bond and are unable to do
that. [What happens] if we can’t find anyone to do a surety
bond for us?” she asked.

She and others whose questions went hanging were asked to send
an email to Whelan ([email protected]) or
told their questions would be addressed in the forthcoming FAQs. In
the interim, Whelan said he would take email questions from all
providers.

Among items that were clarified during the call:

–The surety bond is predicated on an NPI number, not on a tax
ID number. If a provider has two separately enrolled DMEPOS
locations, each with its own NPI, a $50,000 bond must be obtained
for each site.

–Companies with more than one NPI can obtain a single bond that
encompasses multiple NPIs and locations. For example, a provider
with 10 locations can obtain a $500,000 bond that covers all 10.
The bond must, however, specify all the locations it covers.

–If a company is enrolling a new location, it can submit an
amendment to the existing bond rather than obtaining a new,
separate bond.

–For providers who are adding a new location, “you would
be subject to the May 4 deadline for the new location,”
Whelan said.

–A higher bond amount may be required for each final
“adverse action” imposed against an NPI, including: a
Medicare-imposed revocation of billing privileges; suspension of a
license to provide health care by any state licensing authority;
revocation or suspension by an accreditation organization; a
conviction of a federal or state felony offense within the last 10
years proceeding enrollment, revalidation, or re-enrollment; or an
exclusion or debarment from participation in a federal or state
health care program. The NSC defines an “elevated bond amount” of
$50,000 per occurrence in addition to the base surety bond amount
of $50,000 for each adverse action.

–A list of certified sureties approved by the Treasury
Department from which bonds can be secured can be found at
www.fms.treas.gov/c570/index.html.
“For purposes of the surety bond requirement, these sureties
are considered authorized and are the only sureties from which a
supplier may obtain a bond,” Whelan said.

–“If a surety determines that a provider poses a higher
risk of loss, some sureties may choose not to offer a bond or may
offer a bond but at elevated cost,” Whelan said.

–To prove it has obtained a bond, an HME company should submit
a copy of the bond agreement as well as any certificates of proof
to the NSC. If the NSC requires additional documentation, the
provider will be contacted. A specific address to send the bond
information to at the NSC will be given soon, Whelan said.

–A revised CMS enrollment form 855S will be released shortly
with a place to list the surety bond.

An audio recording and transcript of the March 17 teleconference
will be posted to the Special
Open Door Forum Web site and will be accessible beginning March
25.