With an intention to control and stop instances of fraud related to false medical billing, the Center for Medicare and Medicaid Services, which is commonly known as CMS, put in place the Medicare & Medicaid Bonds in the year 2009. Under the requirements of these bonds, all suppliers of durable medical equipment, which include prosthetics, orthotics and supplies, are required to submit a surety bond of 50,000 USD before they can bill Medicare for their services.
The primary purpose of these Surety Bonds is:
1. To allow only legal suppliers of durable medical equipment to register & take part in the Medicare program
2. To minimize instances of fraud related to false medical billing
3. To guarantee that Medicare gets a reimbursement for any losses as a consequence of illegal business activities
4. To safeguard the interests of customers from malpractice by bonded suppliers of durable medical equipment (DMEPOS) including physicians and medical professionals.
Although a few suppliers falling under the DMEPOS category are exempted from this bond as well, but for that to happen, it is mandatory that the business must be solely-owned and operated by a physical or occupational therapist themselves, and the items thus furnished should only be for the own patients of these therapists as a part of their professional service, and the billing should only be for orthotics, prosthetics and other related supplies. Despite very strong protests from many quarters regarding this exception, there is no leniency for private nursing homes or pharmacies that bill Medicare for DMEPOS. This bond regulation also makes it necessary for all suppliers to submit a surety bond if there is a change in the ownership of the company as well. Similarly, if the business is moving to a new location, a new surety bond would also be needed in this condition.
Since these bonds are required by the Center for Medicare and Medicaid Services, they are also referred to as Medicare and Medicaid Surety Bonds. These bonds are quite similar, but they are not issued in the same form. In common parlance, these surety bonds are also called DMEPOS Surety Bond, Medicaid Surety Bond, Medicaid DMEPOS, or Medicare DMEPOS.
Just like other surety bonds, the cost of Medicare & Medicaid Bonds is also dependent upon several factors, like, the credit score of applicant, the surety company offering the bond, and the bond premium depending on its type. The 50,000 USD amount for the surety bond covers only one location of a DMEPOS supplier. If a DMEPOS supplier manages 2 locations, then the surety bond amount would be 100,000 USD for both the locations.