CMS Publishes Proposed Rule, Seeks Comments on Surety Bonds for DMEPOS Suppliers

The Centers for Medicare & Medicaid Services (CMS) is inviting comments on its proposed rule that would require DMEPOS suppliers to provide surety bonds to CMS.

The proposed rule was published in the Federal Register on Aug. 1. It stated that all DMEPOS suppliers billing Medicare would be required “to furnish CMS with a surety bond. We believe that this requirement would limit the Medicare program risk to fraudulent DME suppliers; enhance the Medicare enrollment process to help ensure that only legitimate DME suppliers are enrolled or are allowed to remain enrolled in the Medicare program; ensure that the Medicare program recoups erroneous payments that result from fraudulent or abusive billing practices by allowing CMS or its designated contractor to seek payments from a Surety up to the penal sum; and help ensure that Medicare beneficiaries receive products and services that are considered reasonable and necessary from legitimate DME suppliers.”

In proposing the rule, CMS referred to section 4312(a) of the Balanced Budget Act of 1997 and section 1834(a) of the Social Security Act.

In business, a surety is generally defined as a third-party that guarantees that a contractor will fulfill an obligation of work or services to be provided. A surety bond is a contract among the three parties — the provider, the recipient and the surety — with the surety obliged to honor the provider’s agreement if the provider — in this case, the DMEPOS supplier — is unable or unwilling to uphold its contract with the second party (CMS).
The proposed rule suggests a surety bond value of $65,000.

CMS is seeking comments concerning the proposed rule. The deadline for submitting comments is Oct. 1, 2007.

Comments may be sent electronically, by mail or by hand delivery. In every case, comments should reference file code CMS-6006-P. To send online comments, go to, and click on the link “Submit electronic comments on CMS regulations with an open comment period.” Then click on the link to CMS-6006-P. Send written comments via regular mail (must be received by the deadline) to CMS, Department of Health and Human Services, Attention: CMS-6006-P, P.O. Box 8017, Baltimore, MD 21244-8017.

This article originally appeared in the September 2007 issue of Mobility Management.

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