Medicaid Bond
Medicaid Bonds remain a contentious but now mandatory bond for some medical equipment providers. These bonds are often called DMEPOS Bonds, as they are required for suppliers and manufacturers of durable medical equipment, prosthetics, orthotics and supplies, or DMEPOS.
This bonding requirement grew from a ruling that took effect in January 2009. The Centers for Medicare & Medicaid instituted the new bonding requirement to cut down on malpractice and medical fraud.
DMEPOS companies must have a bond in hand by Oct. 1. Generally, these are $50,000 surety bonds. Some companies will pay more, depending on their level of risk.
Companies with more than one location must obtain a bond for each National Provider Identifier (NPI). That means a DMEPOS company with three locations must have a $150,000 DMEPOS bond, or one for each location.
There are exceptions and exemptions to the bonding requirement. For example, suppliers operated by the government with a similar surety bond. Other exemptions include:
Companies making custom prosthetics and orthotics that are either private-practice or state-licensed are exempt if they are owned and operated solely by prosthetic and orthotic personnel and only billing for those supplies.
Practitioners that are both physician and non-physician are exempt if the items are furnished only to the physician or non-physician practitioner's patients as part of the service. Also covered are:
- physician assistants
- nurse practitioners
- clinical nurse specialists
- certified registered nurse anesthetists
- certified nurse-midwives
- clinical social workers
- clinical psychologists and registered dietitians or nutrition professionals.
Private-practice occupational and physical therapists are exempted if:
- They are owned and operated by the therapist; the DMEPOS items are given to patients as part of professional service; and the business bills only for DMEPOS supplies.
DMEPOS suppliers that have been the subject of adverse legal action with the past 10 years must obtain additional $50,000 bonds. Those actions can include:
- Loss of Medicare billing privileges
- Having a licenses suspended or revoked
- Having accreditation suspended or stripped
- A felony conviction
- Being excluded from a state or federal health program
Currently, nursing homes and pharmacies that bill for Medicaid DMEPOS are not exempt. But there is a continued lobbying movement to enact exemptions for these groups before the looming deadline strikes.
Since the business could potentially have to pay the full value of the bond, surety companies make sure the business can cover the full amount if necessary. If a healthcare facility has a poor credit rating, financial statements or other unfavorable factors, it will have a more difficult time obtaining a patient trust bond and will most likely have to use a special sub par credit bond program. Under these circumstances the facility will likely pay a higher price for its bond.
