Surety bond rule: Desperately seeking answers

Sunday, April 5, 2009

BALTIMORE - The national competitive bidding rule goes into effect later this month, but it's the surety bond rule that dominated conversation during last week's Open Door Forum.

CMS officials offered a few details and clarifications on the $50,000 surety bond rule, which goes into effect May 4 for new providers who seek to enroll in Medicare and those changing ownership, and Oct. 2 for existing providers. They include:

--    If an application is pending with the National Supplier Clearinghouse (NSC) on May 4, it will be subject to the rule.

--    The following information will be required to obtain a bond: corporate and/or personal financial statements, tax returns, billing policies and procedures, National Provider Identifier (NPI) applications, etc.

--    The process of obtaining a bond should take about 15 days.

--    It's the provider's responsibility to submit the bond to the NSC.

During the question-and-answer period, one provider expressed concern that there aren't enough carriers to offer surety bonds specific to the HME industry.

"CMS continues to work with the Surety Association to make sure that a market exists," said Jim Bossenmeyer, director of the Office of Financial Management's Division of Provider/Supplier Enrollment.

Check the Department of Treasury's Web site, Bossenmeyer said, for a list of carriers:

Confusion remains over who does and doesn't need to obtain a surety bond. One provider called in to ask whether, as a pharmacy that supplies Part B drugs, he needs a bond.

"The only organizations that are subject to the surety bond rule are those organizations that are enrolling in the Medicare program as DMEPOS suppliers or those that are already enrolled as suppliers," Bossenmeyer said. "If you're stating that you're not a DMEPOS supplier, then there is no bond requirement."

The provider then asked: "If I currently sell diabetic strips, and I decide not to do so because of the cost of the bond, but I continue to supply Part B drugs, am I exempt from the requirement?"

Bossenmeyer: "Once you withdraw as a supplier with the NSC, which would be your financial decision to make, you would no longer be participating in the Medicare program as a DMEPOS supplier, and you wouldn't be required to obtain a surety bond."

Another provider called in to ask whether a bond obtained to meet Medicaid regulations could be applied to the Medicare rule.

Bossenmeyer: "It will need to meet federal requirements. It will need to be from a company on the Treasury list. If you have obtained a bond from a surety that is not recognized by Treasury, you will definitely need a separate bond."

CMS expects to release a FAQ on this topic in the next few weeks.

Throughout the call, Bossenmeyer reiterated that providers need one bond per NPI.

Other details from the forum:

--    Enrollment: CMS has updated its 855S enrollment application. Providers must begin using the form June 1, but officials encourage them to start using it now.

--    Competitive bidding: The rule goes into effect April 18 and CMS must start the program some time in 2009. "We are still evaluating the timeline to determine how to proceed in order to be in compliance with this requirement," said Joel Kaiser, deputy director of DMEPOS policy.

--    Accreditation: If providers don't become accredited by Oct. 1, 2009, the NSC will begin the revocation process (regulation 42CFR, section 424.535). "If you wish to not become accredited and you want to dis-enroll, just go to our Web site and download form 855S," said Sandra Bastinelli, acting division director of special programs.