What are the surety bond requirements for DME?

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01/14/2019
Eric Weisbrot

Several million Americans rely on Medicare as their main source of health insurance coverage, particularly those over the age of 65. Through Medicare, several options are available for how medical bills for things like prescriptions, exams, tests and medical equipment are paid for by the federal government or the individual insured under the plan. When it comes to durable medical equipment, such as blood sugar monitors, canes, wheelchairs and nebulizers, individuals covered under a Medicare plan often work with special suppliers to get the items they need to remain healthy.

Individuals or companies that work as durable medical equipment suppliers must meet specific requirements to comply with Medicare laws and regulations. One of these requirements, a durable medical equipment surety bond, relates to the prevention of fraud against patients. Here’s what you need to know as a durable medical equipment supplier and your surety bond requirements.

What is a durable medical equipment surety bond?

A durable medical equipment surety bond is a federal surety bond required under CMS. Any supplier of durable medical equipment, including orthotics, supplies, and prosthetics, must have a bond for each location in which they utilize Medicare billing. The purpose of this surety bond is to reduce fraudulent billing of Medicare, protecting the system as well as its patients.

When a supplier has a durable medical equipment surety bond, a claim against a billing practice is submitted to the bond or surety company to help cover financial losses or other damages. The bond helps create a foundation of legitimacy for suppliers while safeguarding the Medicare system from erroneous charges or billing over time.

How much is required?

The surety bond requirement for durable medical equipment suppliers went into effect on a federal level in 2009, as published in the Federal Register. The amount of the bond is no less than $50,000 per location where billing to Medicare takes place. Each supplier is required to have this amount of a surety bond to ensure it complies with the law.

Some medical equipment suppliers are exempt from the surety bond requirement, however. Those that are government-owned, state-licensed personnel operating private practices with custom orders, and some physicians and non-physician providers are not required to have the same federal surety bond.

How to get it and cost

Securing a durable medical equipment surety bond for your supplier business is not a difficult task. However, it does require you to work with a reputable surety agency that understands the requirements set forth for suppliers that bill through Medicare. Each surety agency will have its own process for getting a surety bond, but they all begin with an application that includes details about the business, the amount of the bond, the state in which the business operates, and your credit history.

Surety agencies look into your financial track record because the bond itself is a form of extended credit. If you have less than ideal credit, you can still get a durable medical equipment bond, but the cost of that bond may be higher. Regardless of your financial history, a durable medical equipment surety bond is priced as a percentage of the total bond amount, so the expense is often minimal to suppliers.

Getting a surety bond for your durable medical equipment supplier business is a crucial component of operating legally. The process is simple, but it is necessary to understand this requirement before working with Medicare patients to meet their medical equipment needs.

Eric Weisbrot is the chief marketing officer of JW Surety Bonds.