DMEPOS Medicare Program Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain a DMEPOS Medicare Program bond

At a Glance:

• Average Cost: Between 0.5% to 5% of the bond amount per year based on the applicant’s credit
• Bond Amount: Minimum of $50,000 (more on this later)
• Who Needs it: All suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) participating in the Medicare program
• Purpose: To ensure the Centers for Medicare and Medicaid services receive compensation for financial harm if the DMEPOS supplier commits billing fraud
• Who Regulates DMEPOS Suppliers: The Centers for Medicare and Medicaid Services (CMS)

Background

Federal Statute 424.57 requires all DMEPOS suppliers that bill Medicare for services to enroll with CMS. Congress enacted the enrollment requirement to ensure that eligible suppliers receive compensation for services that are covered under Medicare. To ensure that CMS does not suffer a loss if the supplier commits billing fraud, DMEPOS suppliers must purchase and maintain a surety bond to be eligible for enrollment in the Medicare program.

What is the Purpose of the DMEPOS Medicare Program Bond?

CMS requires DMEPOS suppliers to purchase a surety bond as part of the application process to enroll in the Medicare program. The bond ensures that CMS will receive compensation for financial harm if the supplier fails to abide by the regulations set forth in federal statute 424.57. Specifically, the bond guarantees CMS will not suffer financial harm if the supplier submits inaccurate billing statements. In short, the bond is a type of insurance that protects CMS if the supplier commits billing fraud.

How Can an Insurance Agent Obtain a DMEPOS Medicare Program Surety Bond?

BondExchange makes obtaining a DMEPOS Medicare Program bond easy. Simply log in to your account and use our keyword search to find the “Medicare” 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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How is the Bond Amount Determined?

Federal statute 424.57 requires DMEPOS to purchase a $50,000 surety bond per National Provider Identification (NPI) registered to bill Medicare. However, the statute also dictates that suppliers must purchase an additional $50,000 surety bond for every adverse legal action that has occurred within the past 10 years.

Is a Credit Check Required for the DMEPOS Medicare Program Bond?

Surety companies will run a credit check on the owners of the Medicare Supplier to determine eligibility and pricing for the DMEPOS Medicare Program bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Medicare Program Bond Cost?

The Medicare Program bond can cost anywhere between 0.5% to 5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. BondExchange also offers monthly pay-as-you-go options for these bonds. The chart below offers a quick reference for the bond cost on a $50,000 bond requirement.

$50,000 Medicare Program Bond Cost

Who is Required to Purchase the Bond?

DMEPOS suppliers are required to purchase and maintain a surety bond before enrolling in the Medicare program as a supplier. To paraphrase federal statute 424.57, a DMEPOS supplier is an individual or business entity that sells or rents Part B covered items to Medicare beneficiaries.

The following supplier types are exempt from the surety bond requirement:

• Government-operated suppliers that have a comparable surety bond required under state law
• State-licensed orthotic and prosthetic personnel in private practices making custom made orthotics and prosthetics if:
  • The business is solely owned and operated by orthotic/prosthetic personnel
  • The business is only billing for orthotic, prosthetics, and supplies
• Physician and nonphysician practitioners providing items to their own patients as part of their regular services
• Physical and occupational therapists in private practice if:
  • The business is solely owned and operated by the physical/occupational therapist
  • The items are provided solely to the therapist’s patients as part of their regular services
  • The business is only billing for orthotic, prosthetics, and supplies

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 DMEPOS Suppliers Enroll in the Medicare Program?

DMEPOS suppliers must navigate several steps to enroll in the Medicare program Below are the general guidelines, but applicants should refer to the CMS’s enrollment page for details on the process.

Enrollment Period – DMEPOS suppliers are required to revalidate their enrollment at least once every three years

Step 1 – Obtain a Business License

CMS requires DMEPOS suppliers to obtain all applicable state licenses before enrolling in the Medicare program. Suppliers should consult their state’s Department of Insurance (or equivalent agency) to determine if they are subject to any licensing requirements.

Step 2 – Obtain an NPI for Each Practice Location

Supplies must obtain an NPI for each practice location and can do so by submitting an application on the National Plan & Provider Enumeration System (NPPES) website

Step 3 – Purchase Insurance

CMS requires DMEPOS suppliers to obtain comprehensive liability insurance with a minimum limit of $300,000. For suppliers that manufacture their own items, the insurance must cover product liability and completed operations.

Step 4 – Complete the Application

All DMEPOS Supplier Medicare program enrollment applications should be completed online here. Suppliers must complete the application in its entirety, and pay a $595 fee.

All enrollment applications are processed through the National Supplier Clearinghouse (NSC). Suppliers can contact the NSC here.

Step 5 – Purchase a Surety Bond

DMEPOS suppliers must purchase and maintain a surety bond (see above for limits)

How do DMEPOS Suppliers Revalidate Their Enrollments?

DMEPOS suppliers can revalidate their enrollment online here and are required to do so at least once every three years.

What are the Insurance Requirements for DMEPOS Suppliers Enrolling in the Medicaid Program?

CMS requires DMEPOS suppliers to obtain comprehensive liability insurance with a minimum limit of $300,000. For suppliers that manufacture their own items, the insurance must cover product liability and completed operations. DMEPOS suppliers must purchase and maintain a surety bond (see above for limits).

How Do DMEPOS Suppliers File Their Bonds?

DMEPOS suppliers should mail submit their completed bond form, including the power of attorney, to the following address:

National Supplier Clearinghouse
Palmetto GBA, AG-495
P.O. Box 100142
Columbia, SC 29202-3142

The surety bond requires signatures from both the surety company that issues the bond and from the DMEPOS Supplier. The surety company should include the following information on the bond form:

• Legal name, address, tax identification number (TIN), NPI, and NSC/PTAN number (if applicable) of entity/individual(s) buying the bond
• Surety company’s name and state of incorporation
• Bond amount
• Date the bond is signed

What Can DMEPOS Suppliers Do to Avoid Claims Against Their Medicare Program Bonds?

To avoid claims made against their bonds, DMEPOS Suppliers must ensure that they do not commit billing fraud.

What Other Insurance Products Can Agents Offer DMEPOS Suppliers?

CMS requires DMEPOS suppliers to obtain comprehensive liability insurance as a prerequisite to enrolling in the Medicare program. 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 DMEPOS Supplier Customers?

CMS conveniently provides a public database to search for active DMEPOS suppliers enrolled in the Medicare program. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.