Surety Bonds
Don Foley
Description
Collection
Title:
Surety Bonds
Creator:
Don Foley
Date:
1/12/2009
Text:
Dear List,
There has been a lot of information going around about the new Surety Bond
requirement but as of today, 1/12/09, the bond language is still unclear and
The Surety & Fidelity Association of America (SFAA) and the National
Association of Surety Bond Producers (NASBP) are still working with CMS to
get clarification as to how the final bond is to read, and what the
expectation is as to ‘when’ the bond is supposed to respond in the event of
a claim by Medicare.
Without clarification and a standard bond form it is unwise to jump the gun.
Cailor Fleming is in talks with several of the largest bond companies in the
country, but their position is on hold until they resolve the final
language.
What we do know is that on January 2, 2009, seventeen months after proposing
the regulation and eleven years after the authorizing statute was enacted,
CMS issued the final regulations concerning the bond requirements for
DMEPOS.
The Balanced Budget Act of 1997 requires all DMEPOS suppliers to provide a
surety bond in an amount not less than $50,000. Under final regulations,
beginning October 2, 2009, CMS will require DMEPOS suppliers to post a
separate surety bond in the amount of $50,000 for each NPI number to which
Medicare has granted billing privileges. Beginning May 4, 2009, the
following entities are required to submit a $50,000 bond:
* Suppliers enrolling in the Medicare program, making a change in
ownership or responding to a revalidation or re-enrollment request;
* Suppliers that seek to become an enrolled DMEPOS supplier through a
purchase or transfer of assets or ownership interest; and
* New practice locations of a DMEPOS supplier
For “high risk” suppliers, those that have a history of adverse legal
action, a larger bond will be required. The increase will be $50,000 per
adverse legal action, plus the base amount of $50,000. The regulations
define ‘adverse legal action’ as (1) a revocation of Medicare billing
privileges, (2) a suspension or revocation of a license to provide health
care, (3) revocation or suspension by an accrediting organization, (4) a
conviction of a federal or state felony offense within the 10 years
preceding enrollment, revalidation or re-enrollment or (5) an exclusion or
debarment from participation in a federal or state health care program.
Under the bond, the surety is required to pay CMS, within 30 days of
receiving sufficient evidence establishing liability: (1) the amount of any
unpaid claim for which the supplier is responsible, and (2) the amount of
any civil money penalty (“CMP”) or assessment imposed by CMS or the Office
of Inspector General.
The regulation exempts the following groups from posting the bond: 1)
Government-operated DMEPOS suppliers if the supplier has provided CMS with a
comparable surety bond under State law; 2) State-licensed Orthotic and
prosthetic personnel in private practice making custom made Orthotics and
prosthetics if the business is solely-owned and operated by the Orthotic and
prosthetic personnel, and the business is only billing for Orthotic,
prosthetics, and supplies; 3) Physicians and non-physician practitioners; 4)
Physical and occupational therapists.
The regulation is not a model of clarity (to say the least) and requires
clarification, particularly with respect to the scope of the bond’s
coverage. We also need to find out if C-Corps and S-Corps (let alone LLC’s)
in licensed states are exempt, and we need to determine if all satellite
locations truly need a bond.
Lastly, these issues regarding the clarity of the regulation call for a
standard bond form. CMS is arguing against this suggestion and appears not
to want to put itself on the line by committing to a standard language,
which will only serve to leave the issue grey and murky. Nonetheless, as
soon as the Surety Association and the bond companies feel comfortable
enough to proceed, we will inform this list.
Thanks Again,
Don Foley
Cailor Fleming
800.796.8495
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Checked by AVG.
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7:04 AM
There has been a lot of information going around about the new Surety Bond
requirement but as of today, 1/12/09, the bond language is still unclear and
The Surety & Fidelity Association of America (SFAA) and the National
Association of Surety Bond Producers (NASBP) are still working with CMS to
get clarification as to how the final bond is to read, and what the
expectation is as to ‘when’ the bond is supposed to respond in the event of
a claim by Medicare.
Without clarification and a standard bond form it is unwise to jump the gun.
Cailor Fleming is in talks with several of the largest bond companies in the
country, but their position is on hold until they resolve the final
language.
What we do know is that on January 2, 2009, seventeen months after proposing
the regulation and eleven years after the authorizing statute was enacted,
CMS issued the final regulations concerning the bond requirements for
DMEPOS.
The Balanced Budget Act of 1997 requires all DMEPOS suppliers to provide a
surety bond in an amount not less than $50,000. Under final regulations,
beginning October 2, 2009, CMS will require DMEPOS suppliers to post a
separate surety bond in the amount of $50,000 for each NPI number to which
Medicare has granted billing privileges. Beginning May 4, 2009, the
following entities are required to submit a $50,000 bond:
* Suppliers enrolling in the Medicare program, making a change in
ownership or responding to a revalidation or re-enrollment request;
* Suppliers that seek to become an enrolled DMEPOS supplier through a
purchase or transfer of assets or ownership interest; and
* New practice locations of a DMEPOS supplier
For “high risk” suppliers, those that have a history of adverse legal
action, a larger bond will be required. The increase will be $50,000 per
adverse legal action, plus the base amount of $50,000. The regulations
define ‘adverse legal action’ as (1) a revocation of Medicare billing
privileges, (2) a suspension or revocation of a license to provide health
care, (3) revocation or suspension by an accrediting organization, (4) a
conviction of a federal or state felony offense within the 10 years
preceding enrollment, revalidation or re-enrollment or (5) an exclusion or
debarment from participation in a federal or state health care program.
Under the bond, the surety is required to pay CMS, within 30 days of
receiving sufficient evidence establishing liability: (1) the amount of any
unpaid claim for which the supplier is responsible, and (2) the amount of
any civil money penalty (“CMP”) or assessment imposed by CMS or the Office
of Inspector General.
The regulation exempts the following groups from posting the bond: 1)
Government-operated DMEPOS suppliers if the supplier has provided CMS with a
comparable surety bond under State law; 2) State-licensed Orthotic and
prosthetic personnel in private practice making custom made Orthotics and
prosthetics if the business is solely-owned and operated by the Orthotic and
prosthetic personnel, and the business is only billing for Orthotic,
prosthetics, and supplies; 3) Physicians and non-physician practitioners; 4)
Physical and occupational therapists.
The regulation is not a model of clarity (to say the least) and requires
clarification, particularly with respect to the scope of the bond’s
coverage. We also need to find out if C-Corps and S-Corps (let alone LLC’s)
in licensed states are exempt, and we need to determine if all satellite
locations truly need a bond.
Lastly, these issues regarding the clarity of the regulation call for a
standard bond form. CMS is arguing against this suggestion and appears not
to want to put itself on the line by committing to a standard language,
which will only serve to leave the issue grey and murky. Nonetheless, as
soon as the Surety Association and the bond companies feel comfortable
enough to proceed, we will inform this list.
Thanks Again,
Don Foley
Cailor Fleming
800.796.8495
No virus found in this outgoing message.
Checked by AVG.
Version: 7.5.552 / Virus Database: 270.10.6/1888 - Release Date: 1/12/2009
7:04 AM
Citation
Don Foley, “Surety Bonds,” Digital Resource Foundation for Orthotics and Prosthetics, accessed November 23, 2024, https://library.drfop.org/items/show/230013.
