Get your bid bond

One of the many items to check off on the to-do list for HME providers planning to submit bids in Round 2021 of competitive bidding is obtaining $50,000 bid bonds for each CBA in which they plan to submit a bid. The team at VGM Insurance Services, which has partnered with Lexon Insurance Company to offer bid bonds, recently offered some clarifications about the new requirement.

What's a bid bond?

Bid bonds are in addition to the surety bonds required to participate in the Medicare program, says Leanne Kelly, surety bond portfolio manager.

“There are 130 different CBAs that, if providers wish to have the opportunity to (bid on) them, they are required to carry a bid bond,” she said.

It doesn't matter how many product categories they plan to submit bids for, or how many locations they have in a particular CBA, it's still one $50,000 bond per CBA, she says.

How do I get one?

The bid bond application process is similar to that of surety bonds, with the additional requirement that providers will also need to provide two years of financial statements—similar to what they will have to provide during the bid process with CMS,” said Kelly.

Providers should also take a hard look at what their business can handle before they submit the bid bond application, says Lizzie Kelly, director of agency services.

“They must evaluate what their capacity is, what it costs them to put out equipment, what the cost of service is if they are to bid that area,” she said. “It's ultimately a business decision.”

What if I need help?

Because the bid window is not open yet, VGM Insurance has been focusing on education, says Bill Wilson, vice president of sales and marketing.

“We want to be there as industry advocates,” he said. “How do we educate the client base that the DMEPOS surety bond and the bid bond are truly different and you are going to have to work though this process.”