Surety bonds: 'At what point will all of this happen?'

Sunday, March 22, 2009

BALTIMORE - The implementation date for surety bonds is fast approaching, but details were few and far between at the March 17 special Open Door Forum.

"We understand the concerns, but we believe it's important to provide consistent answers to the supplier community," said CMS official Frank Whelan. "We will try to do this as rapidly as we can, but we want to make sure everyone is on the same page."

Enrolled providers must have a $50,000 surety bond for each National Provider Identifier (NPI) by Oct. 2, 2009. New providers seeking to enroll in Medicare or providers changing ownership must have a surety bond by May 4, 2009.

The agency posted the first of several planned FAQs on Friday at

Some of the details given:

*    CMS estimates the bonds will cost about 3% of their value--about $1,500 each.

*    The bonds must cover the amount of any unpaid claim, plus accrued interest, for which the DMEPOS supplier is responsible; they must also cover the amount of any unpaid claims, civil monetary penalties or assessments imposed by CMS or the Office of Inspector General on the DMEPOS supplier plus accrued interest.

Some callers to Tuesday's forum expressed concern about the lack of availability of bonds.

"We have been trying to find someone in Michigan to do a surety bond," said one provider. "Even VGM has a Web site for it, but they don't have conclusions. At what point will all this happen?"

One caller pointed out that bond carriers may be waiting until CMS issues its final wording on the rule.

"(The surety bond carriers) are hesitant to try to put a bond together because it may not qualify or satisfy the needs of CMS," said the caller, from Cailor Fleming Insurance. "Until CMS comes out with all their final ruling for the wording, then nothing will get done."

CMS is working with the Surety Association on final language, and a final "blueprint" for the bonds is expected in the next few weeks, Whelan said. The agency is willing to hold a teleconference with insurers and bond carriers to address concerns.

In the meantime, for providers who want to get a head start, there is a list of Department of Treasury-approved surety bond carriers posted at

"These are considered authorized, and therefore the only (surety bond carriers) from which suppliers may obtain bonds," said Whelan.

The final rule was published in the Jan. 2, 2009, Federal Register and may be viewed at

During the call, Whelan outlined key provisions of the rule, including:

Adverse legal actions

Elevated bond amounts are required for providers with adverse legal actions. Adverse legal actions are: a revocation of Medicare billing privileges; a suspension or revocation of a license to provide health care; revocation or suspension by an accreditation organization; a conviction of a federal or state felony offense within the 10 years preceding enrollment, revalidation, or re-enrollment; or an exclusion or disbarment from participation in a federal or state healthcare program. Each adverse legal action is an additional $50,000.


Government-operated suppliers, as long as the supplier has supplied CMS with a comparable surety bond under state law; state licensed orthotists and prosthetists--not including pedorthists--in private practice making custom made O&P if the business is solely owned and operated and is only billing for O&P; Physicians and physician assistants; certified midwives; registered dieticians; clinical social workers; clinical psychologists; and physical and occupational therapists.