The good, the bad and the surety bond

Sunday, September 30, 2007

WASHINGTON - CMS should not make providers with good track records obtain surety bonds, says AAHomecare.

Instead, the agency should require only providers who pose a risk to get a $65,000 surety bond for each of their national provider identification numbers (NPI).

Congress mandated the surety bond requirement in The Balanced Budget Act of 1997 (BBA). CMS issued a proposed rule in 1998, but never finalized it. The agency initiated a new rulemaking proceeding in August.

AAHomecare said the new proposal could increase providers' cost and paperwork burdens. According to CMS, the surety bond requirement will cost providers approximately $198 million annually.

Additionally, AAHomecare believes the proposed surety bond requirement will not strengthen program integrity and may duplicate other initiatives that CMS has not fully implemented, such as requirements that providers meet quality standards and get accredited.

AAHomecare recommends that CMS modify the proposed rule in the following ways:

* CMS should not impose an inflation adjustment on the amount of the bond because reimbursement for HME items since the BBA has either been cut or frozen. The $65,000 bond is an inflation-adjusted amount from the original $50,000 bond CMS proposed in 1998.

* CMS should exempt rural providers and large national chain providers. Exempting rural providers, provided they don't otherwise pose risks, will ensure access to care for rural beneficiaries. National, publicly traded providers have resources to refund any claims payments they receive in error and are already heavily regulated.

* Pharmacies, physicians and other practitioners who bill Medicare for DMEPOS items should not be exempted from the requirement to obtain a surety bond unless they otherwise meet the criteria for another exemption.

* A final rule must include a mechanism to protect providers in the event that the National Suppliers Clearinghouse or a surety mistakenly reports that a bond has been cancelled, or the company that issued the bond goes out of business. At a minimum, providers should have notice that their billing number will be revoked and an opportunity to demonstrate that they have a bond before the revocation.