Suppliers of certain medical equipment under medical equipment that includes Durable Medical Equipment, Prosthetics, Orthotics and Supplies (referred to as DMEPOS) need surety bonds. Learn more about these bonds including what they guarantee, who needs them and how to easily obtain them.
A DMEPOS Bond for Suppliers is a surety bond that helps protect against financial fraud and abuse against the Centers for Medicare and Medicaid Services (CMS).The bond guarantees that all unpaid claims, Civil Monetary Penalties (CMPs), and assessments, plus accrued interest assessed by CMS and The Office of Inspector General (OIG) will be paid to CMS.
The DMEPOS Supplier is the principal on the bond. The supplier purchases a financial guarantee from a surety bond company, called the Surety. In exchange for payment and indemnity, the surety provides a bond to CMS that guarantees that the principal will pay all claims, penalties and assessments, including interest that are due by the principal to CMS.
Should the principal supplier not make these payments, CMS or any CMS contractor can make a claim against the bond. The surety will investigate and be required to pay these claims. The surety can then seek reimbursement from the principal under the indemnity agreement. The DMEPOS Bond protects the public by ensuring that CMS can quickly and easily collect amounts owed to it. It is typically easier to collect from a large surety company than a supplier directly.
All Suppliers who receive Medicare reimbursement for durable medical equipment, prosthetics, orthotics, and supplies, with certain exceptions are required to post a DMEPOS Bond as part of the enrollment process under Medicare. As part of the process, the supplier also needs to obtain DMEPOS accreditation from a CMS-approved organization, and enroll in the Medicare program as a DMEPOS supplier. A DMEPOS Bond will be needed for each National Provider Identifier (NPI) registered location.
DMEPOS suppliers must comply with the quality standards of 42 CFR 424.57(c).
Per 4312a of the Balanced Budget Act of 1997 and 42 CFR 424.57, DMEPOS suppliers must obtain a surety bond for not less than $50,000. However, regardless of the number of years the bond has been in place, the number of claims filed, or the dollar amounts of those claims, the bond amount is the most the surety bond company is liable to pay.
A DMEPOS Bond needs to be in place for each location with an NPI. If a supplier has four locations, they will need four $50,000 bonds.
Certain DMEPOS Suppliers may be required to post an elevated bond amount if they have been subject to a final adverse action. This bond amount is $50,000 per occurrence. These actions include one or more of the following:
DMEPOS Bonds can be purchased online in a matter of minutes for most suppliers. Simply fill out the online application, purchase and print your bond. The applicant will need to provide information for a credit check. Additionally, the applicant will need to provide their National Provider ID (NPI) and Tax Identification Number (TIN).
For DMEPOS suppliers with multiple locations, or more complicated situations, it may be easier to contact our experts directly.
DMEPOS Bonds for Suppliers cost 0.5% for most suppliers. That means a $50,000 bond will cost $250 for each year that it is in effect. Some companies may qualify for even better rates. Additionally, some surety bond companies will provide discounts for suppliers willing to purchase multiple years in advance.
The surety or DMEPOS supplier may cancel the bond by giving CMS thirty days written notice to the National Supplier Clearinghouse. If the bond is not replaced within the thirty days, the supplier’s billing privileges will be revoked. The supplier may replace the DMEPOS bond with a different surety bond company, but must still provide CMS with thirty days notice. The surety on these bonds must also notify CMS if any lapse in coverage occurs.
In the event that the bond is canceled and not replaced by another surety company, a rider is not received, or the DMEPOS supplier’s privilege is revoked, the surety’s liability will remain in effect for two years following the cancelation date. The last surety of record will then be responsible.
A DMEPOS Bond must be written so that CMS or any CMS contractor can bring a claim against the bond. The surety is required to pay claims within thirty days of receiving written notice and sufficient evidence. Sufficient evidence is defined as:
Sufficient Evidence - “Documents CMS may supply to the surety in order to establish that a DMEPOS supplier had received Medicare funds in excess of the amount due and payable under the statute and regulations, the amount of a CMP, or the amount of some other assessment against the DMEPOS supplier.”
While DMEPOS supplier bonds are needed to be registered with CMS, they may not be the only bond needed. DMEPOS Bid Bonds are needed for those wishing to be a part of CMS’ Competitive Bidding Program. Additionally, many states have separate DMEPOS Medicaid Bond requirements. These bonds are separate and in addition to the DMEPOS Bond for suppliers in most cases.
A DMEPOS Bond must be written by a surety bond company listed in the U.S. Treasury 570 Circular. This is often referred to as a “T-Listing”. We always recommend verifying your surety bond to make sure it is valid. You can also learn more about surety by visiting our complete guide.
DMEPOS Bonds are required by those supplying certain products to Medicare and Medicaid. These bonds are easy to obtain for most parties and inexpensive. They help protect taxpayer dollars and prevent fraud. Contact the bond experts at Axcess Surety today to obtain DMEPOS Bonds, along with other credit and trade solutions for healthcare providers and suppliers.
Axcess Surety is the premier provider of surety bonds nationally. We work individuals and businesses across the country to provide the best surety bond programs at the best price.
