Surety bond mania: 'It's been crazy'

Sunday, September 6, 2009

WASHINGTON - With less than one month to go before they must have a $50,000 surety bond to continue billing Medicare, HME providers are working like crazy to acquire the all-important insurance coverage.

"It's been steady since about May, but now it's gone to another level," said Bill McMahon, an account executive with Cailor Fleming Insurance in Youngstown, Ohio.

Warren Freeman, director of sales and marketing for VGM Insurance in Waterloo, Iowa, agreed.

"The floodgates have opened," he said. "It's been crazy."

HME providers who bill Medicare must obtain a $50,000 surety bond per national provider identifier (NPI) by Oct. 2.

The numbers are not hard and fast, but so far, based on various estimates, about 35,000 HME providers have secured surety bonds. Medicare reported that about 81,000 providers need a bond. Of that 81,000, about 25,000 will opt not to get a bond and relinquish their provider number. That means when all is said and done, about 56,000 HME providers will be eligible to continue working with Medicare come Oct. 2, Freeman estimated.

(Since a $50,000 surety bond costs about $250, most providers who opt out of Medicare will probably do so for other, more expensive reasons, such as accreditation, which can cost upward of $10,000, or falling reimbursement, say industry watchers.)

It's critical, Freeman said, that once providers obtain surety bonds, that they submit them to the National Supplier Clearinghouse (NSC) by Oct. 1. If they don't, they'll lose their Medicare billing privileges.

"It is extremely important that they send it in by certified mail," MacMahon added. "Get a signature on it. At least they'll have someone to go back to if they need to prove it's been delivered."

For a provider with good credit, it takes two to eight days to get a surety bond. For providers with bad or borderline credit, it can take longer. Insurance companies that issue HME surety bonds appear able to handle the influx of applications, but it's still best not to wait until the last minute, said McMahon and Freeman.

For providers that choose not to get a surety bond or become accredited, it's best to submit a voluntary termination form to the NSC. Providers preserve their rights to re-enroll in Medicare once they meet those requirements. Providers that don't do that will have their supplier numbers revoked. A revocation bars a provider from re-enrolling in Medicare for at least one year after the date of revocation.