Medicare DMEPOS Bonds Protect Healthcare Integrity

The Centers for Medicare & Medicaid Services (CMS) have identified staggering losses due to improper payments within the Medicare program. A significant contributor to this issue is improper billing related to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). To address this concern, the CMS implemented a crucial rule that mandates non-exempt DMEPOS suppliers to obtain a surety bond. Merchants Bonding Company is a market for DMEPOS surety bonds.

The Assurance Behind Medicare DMEPOS Bonds

At their core, Medicare DMEPOS bonds provide an essential guarantee against malpractice and fraud, ensuring that any unpaid claims, penalties, and CMS-imposed assessments are effectively covered. These bonds play a pivotal role in regulating the application process for DMEPOS suppliers, thereby safeguarding the industry against financial misconduct.

Understanding the Bond Amount

Non-exempt DMEPOS suppliers registered with the National Supplier Clearinghouse (NSC) are mandated to secure a $50,000 surety bond for each enrolled National Provider Identifier (NPI) location where their operations are conducted. This requirement ensures that each location adheres to rigorous financial standards, promoting responsible and ethical practices within the healthcare sector.

How Does Merchants Underwrite These Bonds?

Merchants streamlines the process of obtaining DMEPOS bonds through our efficient and secure online platform, the Hub. All $50,000 bonds (applicable to a single location) require a clean credit report for underwriting. In cases where multiple bonds are required, Merchants will need a clean credit report and business and personal financial statements from the applicant.

Are There any Exemptions?

In certain situations, dentists may need the bond. Some DMEPOS suppliers are exempt from the surety bonding requirement. These include government-owned suppliers having provided CMS with a comparable surety bond under state law; state-licensed orthotic and prosthetic personnel in private practice who make custom orthotics and prosthetics but only if the business is solely-owned and operated by said personnel and is billing only for orthotic prosthetics and supplies; physicians and non-physician practitioners if the DMEPOS items are furnished only to their patients as part of their professional service; and physical and occupational therapists if the business is solely-owned and operated by the therapist and if the DMEPOS items are furnished only to their patients as part of their professional service.

Does Merchants Write any Related Bonds?

Beyond Medicare DMEPOS bonds, Merchants Bonding Company provides expertise in a range of related bonding needs:

  • Accountable Care Organization Shared Savings Bond - This is a federal requirement put in place for Accountable Care Organizations by CMS. The bond amount varies, but a clean credit report and business and personal financial statements are typically needed for underwriting.
  • DMEPOS Competitive Bidding Program Bond - The Centers for Medicare and Medicaid Services (CMS) require a DMEPOS Competitive Bidding Program Bond from Durable Medical Equipment Providers (Bidding Entities) wishing to enter competitive bids to supply durable medical equipment under the Medicare program when the bidding window is open. The bond amount is fixed at $50,000 for each Competitive Bidding Area (CBA) in which a bidding entity submits a bid. A clean credit report and business and personal financial statements are needed for underwriting.
  • Home Health Agency Bond - In some states, anyone licensed as a Personal Care Assistance Agency or Group needs a Home Health Agency Bond. Bond amounts and requirements vary by state. Refer to the Hub or your insurance agent for more information.
  • Medicaid Providers Bond - There are other requirements in some states for various types of Medicaid service providers. Rates, bond amount, and underwriting vary. Visit the Hub to search for complete listings or use our Find an Agent tool to find an agent near you.

How do I get a Surety Bond?

Surety bonds are issued by Merchants Bonding Company (Mutual) through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.

What is a Surety Bond?

A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For instance, the surety (Merchants Bonding Company (Mutual)) may provide a surety bond to a construction company (the principal) which is required by the state (the obligee), ensuring the construction company will perform the duties as outlined in the contract. In bonding the construction company, Merchants assumes the risk should the company default or not fulfill their contract. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.

All information provided is subject to change.