Surety bond: Still seeking clarifications

Thursday, April 30, 2009

BALTIMORE--The national competitive bidding rule was expected to go into affect April 18, but it was the surety bond rule that dominated the conversation during an Open Door Forum April 1.

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:

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

4The 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.

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

4 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.

The Department of Treasury’s Web site has a list of approved carriers.

Confusion remains over who needs 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 the Treasury, you will definitely need a separate bond.”