HHS raises surety bond rate for durable medical equipment suppliers

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The U.S. Department of Healthcare and Human Services (HHS) announced a proposed rule to help limit the Medicare program’s risk by requiring all suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) to furnish the Centers for Medicare & Medicaid Services (CMS) with a surety bond. The rule would ensure that Medicare can recover erroneous payments up to $65,000 that result from fraudulent or abusive supplier billing practices.

The rule proposed by CMS implements section 4312 of the Balanced Budget Act of 1997. The rule would require all DMEPOS suppliers, except those that are government operated, to obtain and retain a surety bond in the amount of $65,000. The $65,000 requirement is an inflation-adjusted figure from the $50,000 surety bond amount proposed in the 1997 Act, HHS said.

The proposed rule represents another HHS step in an ongoing effort to combat Medicare fraud with particular focus on DMEPOS suppliers, the agency said. In May this year, HHS and the Department of Justice announced the establishment of a multi-agency team of federal, state and local investigators designed specifically to combat Medicare fraud through the use of real-time analysis of Medicare billing. 

The proposed surety bond requirement follows announcements of two demonstration projects, one requiring that DMEPOS suppliers in South Florida and Southern California reapply to Medicare in order to maintain their billing privileges. The other demonstration requires home health agencies in the Houston area and Southern California to reapply, according to HHS.