Tips to ensure Medicare bond will be accepted under CMS's proposed rule change

August 24, 2016

If you are a Medicare provider who’s had to post a Durable Medical Equipment, Prosthetics, Orthotics, and Supplies surety bond, you need to know about about the latest proposed rule change from the Centers for Medicare & Medicaid Services, because it may affect the legitimacy of the bond you are currently holding.

If you are a Medicare provider who’s had to post a Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) surety bond, you need to know about about the latest proposed rule change from the Centers for Medicare & Medicaid Services (CMS), because it may affect the legitimacy of the bond you are currently holding.

If the CMS gets its way, the rules governing this bond may get more stringent. This could spell trouble for many DMEPOS providers, whose surety bonds may no longer be accepted by CMS. Providers whose bonds are rejected will have to obtain a new surety bond from a surety company that complies with the new CMS guidelines, or face disenrollment from Medicare.

 

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The proposed new bond requirements are laid out in CMS’s Proposed Rule,“Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process.” The proposal includes far-reaching changes for medical equipment suppliers, meant to close loopholes that, according to CMS, are being exploited by certain providers and suppliers in their Medicare claims.

 

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With this Proposed Rule, CMS aims to increase its authority over DMEPOS suppliers’ Medicare enrollment, and expand the definition of what medical suppliers are required to disclose to CMS. There’s a lot to digest in the Proposed Rule, but let’s focus specifically on the surety bond provisions, and go over what you can do to ensure that, no matter what, your DMEPOS bond is accepted by CMS:

New Surety Bond Rules

The Proposed Rule would give CMS the authority to reject any Medicare bond if it’s been furnished by a surety that doesn’t meet certain criteria. For example, if a surety hasn’t submitted required payment to CMS in accordance with the surety bond guidelines in 42 CFR § 424.57(d), bonds issued by it might be rejected. If your Medicare bond is rejected, you’re back to square one: you must purchase a new bond from a surety who has made the requisite payments to CMS, or you could be disenrolled from Medicare.

Next: Know who you're working with

 

What’s more, nonpayment by a surety company regarding one bond could be grounds for CMS to reject all bonds from that surety, even those bonding suppliers who aren’t connected to the nonpayment.

Know Who You’re Working With

This Proposed Rule is complicated by the fact that surety companies don’t work directly with the public, so some DMEPOS providers might fall into the trap of purchasing a bond from a company they don’t know much about. So how do you make sure that your bond won’t be rejected under these proposed changes?

 

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Since DMEPOS providers don’t purchase their bonds directly from surety companies, you’ll have to rely on your surety agent to help you weigh your options. Reputable surety agencies generally only work with companies whose bonds are A-rated and T-listed, so make sure to ask before you sign on the dotted line. Top surety companies are scrupulous about compliance, and have a solid foundation for meeting their obligations.

All Bonds Are Not Created Equal

There are many types of surety bonds, and not all surety agencies have the expertise required to find the best Medicare bonds on the market. Make sure you find an agent with experience in DMEPOS, and who is familiar with bonding requirements for your specialty and according to your location. Some states have additional bonding requirements, request special forms, or use their own terminology. The right surety agent will help you navigate these complexities according to your specific needs.

Next: Getting the best value

 

Getting the Best Value

Of course, you don’t want to pay more than you have to for your surety bond. Your bond premium will be determined by your personal credit score, and other factors regarding your business and finances. A good surety agency will help you showcase all your assets, in order to get you the lowest rate.

If your credit isn’t perfect, don’t despair; most likely you’ll still qualify for a top bond that CMS is sure to accept, albeit at a slightly higher rate.

 

Vic Lance, MBA, is the founder and president ofLance Surety Bond Associates, based in Doylestown, Pennsylvania. He is a surety bond expert who helps business owners in all 50 states get licensed and bonded.