Alabama Medicaid Agency Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain Alabama Medicaid Agency Bonds

At a Glance:

• Lowest Cost: $100 per year
• Bond Amount: Greater than or equal to all resident funds held by the facility
• Who Needs it: All Alabama nursing homes that manage resident funds
• Purpose: To ensure residents will receive compensation for any damages should the nursing home mishandle resident funds
• Who Regulates Medicaid Agency Bonds in Alabama: The Alabama Medicaid Agency

Background

Alabama Administrative Code 560-X-10.3 requires all nursing homes that receive Medicaid payments to enroll with the Medicaid Agency. The Alabama legislature enacted the enrollment requirement to ensure that eligible nursing homes receive compensation for services covered by Medicaid. To ensure that residents are not taken advantage of, nursing homes that hold resident funds in trust accounts must purchase and maintain a surety bond to be eligible for enrollment. Additionally, federal statute 483.10 requires all long-term care facilities that hold patient funds in a trust account to purchase a surety bond or other similar form of security. However, the federal regulation leaves the implementation and enforcement of this requirement to individual states.

What is the Purpose of the Alabama Medicaid Agency Bond?

Alabama requires nursing homes that hold patient funds in trust accounts to purchase a surety bond as part of the application process to enroll as a Medicaid provider. The bond ensures that the nursing home residents will receive compensation for financial harm if the nursing home violates the regulations set forth in Alabama administrative code 560-X-10.14. Specifically, the bond protects residents if the nursing facility in any way mismanages their funds. In short, the bond is a type of insurance that protects the residents if the nursing home acts unethically with their money.

How Can an Insurance Agent Obtain an Alabama Medicaid Agency Surety Bond?

BondExchange makes obtaining an Alabama Medicaid Agency surety bond easy. Simply log in to your account and use our keyword search to find the “Medicaid” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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Is a Credit Check Required for the Alabama Medicaid Agency Bond?

No, a credit check is not required for the Alabama Medicaid Agency bond. Because the bond is considered relatively low risk, the same low rate is offered to all nursing homes in the state regardless of their credit history.

How Much Does the Alabama Medicaid Agency Bond Cost?

The Alabama Medicaid Agency Bond costs either $100 or 1% of the bond amount each year, whichever is greater. BondExchange also offers monthly pay-as-you-go options for these bonds.

Who is Required to Purchase the Bond?

Alabama requires all nursing homes that manage resident funds to purchase a surety bond as a prerequisite to enrolling as a Medicaid provider. To paraphrase Alabama administrative code 560-X-10.01, a nursing home is a facility that provides 24-hour nursing care to residents over the age of 65.

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How do Alabama Nursing Homes Enroll as Medicaid Providers?

Nursing homes in Alabama must navigate several steps to enroll as Medicaid providers. Below are the general guidelines, but applicants should refer to the enrollment statutes for details on the process.

Step 1 – Obtain a Business License

Nursing homes must obtain a business license Alabama Department of Health before submitting their provider enrollments.  The process for obtaining a business license is as follows:

1.a Apply for a Certificate of Need (CON) by emailing a completed application to [email protected] and mailing an application equaling 1% of the project’s cost (minimum of $3,500 and maximum of $12,000) to the following address:

State Health Planning and Development Agency
100 North Union Street, Suite 870
Montgomery, Alabama 36104

1.b Mail a license application to the following address:

State of Alabama
Department of Public Health
Division of Provider Services
P.O. Box 303017
Montgomery, Alabama 36130-3017

Nursing homes must complete the application in its entirety, and submit the following items:

• • An application fee totaling $240 + an additional $6 per bed
  • Company organizational documents
  • Certificate of Authority
  • The facility’s CON
  • Diagram of the facility
  • Copy of the facilities Certificate of Completion issued by the Technical Service Unit

Step 2 – Purchase a Surety Bond

Nursing homes must purchase and maintain a surety bond in an amount that this greater than or equal to the number of resident funds held by the facility at any given time

Step 3 – Enroll as a Medicaid Provider

Nursing homes are eligible to enroll as Medicaid providers after obtaining their CON and business licenses. Nursing homes can complete their provider enrollment online here.

How Do Alabama Nursing Homes Renew Their Business License and Medicaid Certification?

Prior to their license expiration date, the Alabama Department of Health will send the nursing home instructions on how to renew their license. All Alabama Nursing Home Licenses expire on December 31 of each year and must be renewed before the expiration date. Nursing homes can revalidate their provider enrollments online here, and must do so at least once every five years.

How Do Alabama Nursing Homes File Their Bond?

Nursing homes should mail their completed bond form, including the power of attorney, to their district’s Medicaid office. The Medicaid Agency surety bond requires signatures from both the surety company that issues the bond and from the nursing home’s licensed nursing home administrator. The surety company should include the following information on the bond form:

• Legal name and address of entity/individual(s) buying the bond
• Surety company’s name
• Bond amount
• Date the bond goes into effect
• Date the bond is signed

What Can Alabama Nursing Homes Do to Avoid Claims Against Their Bonds?

To avoid claims on their bonds, nursing homes in Alabama must adhere to the following provisions

• Do not mishandle resident funds
• Hold all patient funds in a trust account
• Accurately report all patient funds

What Other Insurance Products Can Agents Offer Nursing Homes in Alabama?

Most reputable nursing homes will seek to obtain insurance coverage. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Alabama Nursing Home Customers?

Alabama conveniently provides a public database to search for certified nursing homes in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.