Tick-Tock: Medicare Bonds Take Effect in Just Two Months

Time is winding down for medical equipment suppliers and other industry figures to comply with new surety bonding regulations.

Starting October 1, manufacturers and suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) will have to obtain a $50,000 Medicare surety bond in order to conduct business. The regulation took effect in January 2009 after a rule imposed by the Centers for Medicare & Medicaid Services (CMS). The requirement is aimed at curbing medical fraud and malpractice.

In most cases, suppliers are required to obtain a Medicare bond, also called DMEPOS bonds, by the government-mandated deadline. There are a couple unique exceptions. The bond amount will actually increase beyond $50,000 for suppliers deemed high risk. At the same time, some suppliers may qualify for an exemption from the Medicare (DMEPOS) bond requirement. Those can include:

  • Government-operated suppliers that have provided CMS with a comparable surety bond under state law.
  • Private-practice and state-licensed orthotic and prosthetic workers making custom orthotics and prosthetics.
  • Physicians and non-physician practitioners, as defined in section 1842(b)(18) of the Social Security Act, 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.
  • Physical and occupational therapists in private practice.

Suppliers with multiple locations need to be aware that bonds are required for each National Provider Identifier (NPI). For example, a larger DMEPOS supplier with five locations would have to obtain a $250,000 Medicare (DMEPOS) Bond, one for each location. Further, DMEPOS suppliers will have to obtain additional $50,000 surety bonds for any adverse legal actions taken against the company within the past 10 years before enrolling. Those adverse legal actions can include:

  • Losing Medicare billing privileges
  • Suspension or revocation of a license
  • Loss or suspension of accreditation
  • A felony conviction
  • Exclusion from a federal or state health care program

Currently, there are no exceptions for nursing homes or pharmacies that bill for Medicare DMEPOS to their own residents. But some pharmacy lobbying groups and related associations are urging Congress to enact exemptions for pharmacies before the deadline strikes.

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