Surety Bond

On December 29, 2008, CMS announced regulations requiring suppliers of certain DMEPOS to post a surety bond as a condition of new or continued Medicare enrollment. The regulation states that beginning May 4, 2009:

  • Suppliers seeking to enroll or changing the ownership of a DMEPOS supplier must submit a $50,000 surety bond for each assigned National Provider Identifier (NPI) for which the DMEPOS supplier is seeking to obtain Medicare billing privileges.
  • Existing DMEPOS suppliers must submit to the National Supplier Clearinghouse (NSC) a $50,000 surety bond for each assigned NPI no later than October 2, 2009.
  • A DMEPOS supplier enrolling a new practice location must submit to the NSC a new surety bond or an amendment or rider to the existing bond, showing the new practice location is covered by an additional base surety bond of $50,000.

Suppliers who have certain adverse legal actions imposed against them in the past may be required to post a higher bond amount. The final regulations permit the NSC to require DMEPOS suppliers to obtain a base surety bond of $50,000 and an elevated surety bond of $50,000 for each occurrence of an adverse legal action within ten years preceding enrollment, revalidation, or reenrollment in the Medicare program.

Some companies or organizations that supply DMEPOS are exempt from the surety bond requirements. Such exemptions include:

  • Certain physician and non-physician practitioners
  • Physical therapists
  • Occupational therapists
  • State-licensed orthotic and prosthetic personnel
  • Government-owned suppliers

The NSC contact information is available on the Enrollment section of this website.

Topics of Interest

Surety Bond Requirement - MLN Matters 6392

Reporting Changes - MLN Matters 6854 (Revised)

Optomitrists - Optometrists who own their own optical shop and furnish only cataract glasses and cataract lenses are currently exempt from the requirements concerning bonding and accreditation. This applies even if there is an optician at the optical shop. (Source NSC, 09/2009)

Surety Bond Submission to the NSC - When submitting your DMEPOS surety bond to the NSC, you are required to complete sections 1, 6, 7, 11 (Optional), 12, and either 14 or 15 of the Medicare enrollment application (CMS-855S). By completing and submitting the required sections of the CMS-855S, you will help to ensure that the NSC is able to correctly associate your DMEPOS surety bond to your enrollment record.

Pharmacy - If your pharmacy is enrolled as a DMEPOS supplier with the NSC and bills the DME MAC for non-accredited products, including Epoetin, immunosuppressive drugs, infusion drugs, nebulizer drugs, or oral anticancer drugs, you are required to have a surety bond.

CMS Questions and Answers - Surety Bond Frequently Asked Questions from CMS as made available on the NSC Website

Collection Procedures - MLN Matters 8636

Claims Against Surety Bonds - MLN Matters 7167

Overpayment Recovery - MLN Matters 7744

Intent to Refer Letters - Effective June 17, 2014, CMS has made implementations/changes to the Surety Bond process under Change Request 8636. These changes include dates of the Intent to Refer (ITR) letters.

  • The date range for sending Intent to Refer (ITR) letters has changed. Suppliers may notice that they are receiving the ITR letter sooner (when the debt has aged 80-90 days).
  • After the ITR has been sent, a notification letter is sent to the supplier's Surety Company along with a redacted copy of the ITR. The information that is redacted is the beneficiary's protected health information (HIPAA regulations).
  • The surety repayment letter is sent to the supplier's Surety company approximately 30 days after the notification letter has been sent, if the debt has not been paid in full
  • The surety company will now have 45 days to repay the debt after the repayment letter is sent, instead of the 30 days that were previously given.

Practice Locations - With the implementation of the surety bond requirements for certain suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) in October 2009, CMS reminds DMEPOS suppliers that each practice location of a DMEPOS supplier must be enrolled in the Medicare program. Each practice location of a DMEPOS supplier is required by Medicare regulations to be uniquely identified; as a result, each practice location must have its own unique National Provider Identifier (NPI) and its own Medicare-assigned Provider Transaction Access Number (PTAN). With the exception described below in the Important Note, there should be a 1-to-1 relationship between a DMEPOS supplier's NPI and its PTAN. The PTAN is assigned to a DMEPOS supplier by the National Supplier Clearinghouse (NSC) upon its enrollment in the Medicare program. (The PTAN has previously been referred to as the NSC Number.)

Important Note: DMEPOS suppliers who are sole proprietorship business structures with more than one practice location must ensure that each location is enrolled in Medicare. Each practice location would be assigned a PTAN upon its enrollment. However, as a sole proprietorship, the business is legally one and the same as the person who is the sole proprietor and, therefore, like any individual, is eligible for only a single NPI.

Resources

 

Last Updated Mon, 24 Feb 2020 11:00:49 +0000