DMEPOS Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about DMEPOS bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts today. 

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What Are DMEPOS Bonds?

DMEPOS stands for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies. DMEPOS bonds are surety bonds that DMEPOS suppliers must purchase before they are allowed to submit bills to Medicare or Medicaid. They are designed to protect the Medicare and Medicaid programs against financial loss due to fraudulent billing by DMEPOS suppliers and to provide a source of funds for recovering damages. They also provide protection when DMEPOS suppliers are overpaid due to unintentional billing errors.

Who Needs Them?

Although there are a few exemptions, the vast majority of DMEPOS suppliers are subject to the $50,000 bonding requirement. Certain providers of physical and occupational therapy who practice privately do not have to be bonded if they meet all three of these conditions:

  • They are the sole owners of their business
  • The only people they provide DMEPOS items to are their own patients
  • Their only Medicare or Medicaid billing is for DMEPOS items.

And certain DMEPOS suppliers will need to purchase more than $50,000 worth of DMEPOS coverage, specifically suppliers who:

  • Operate multiple sites, each with its own NPI number ($50,000 in coverage is required for each such site), or
  • Had their license suspended, were convicted of a felony, and/or lost their Medicare or Medicaid billing privileges due to infractions committed in the preceding 10 years (an additional $50,000 in coverage is required for each infraction).

How Do They Work?

The surety bond agreement for a DMEPOS bond is a legally binding contract among three parties:

  • The “obligee” requiring the bond is the Centers for Medicare and Medicaid Services (CMS),
  • The “principal” is the DMEPOS provider required to purchase the bond, and
  • The “surety” is the company guaranteeing the bond.

The obligee can file a claim against the principal’s bond to recover overpayments, whether they were the result of fraud or error.  The terms of the surety bond agreement legally obligate the principal to pay all claims deemed by the surety to be valid. To expedite resolution of a valid claim, the surety typically pays it on behalf of the principal, but that payment is an extension of credit to the principal, who must subsequently repay the surety.

What Do They Cost?

The annual premium for a DMEPOS bond is a small percentage of the $50,000 required bond amount. What that percentage (the premium rate) will be depends on the surety’s assessment of the risk inherent in extending credit by paying claims on behalf of the principal. The best measure of that risk is the principal’s personal credit score.

When a principal has a high credit score, the assumption is that the risk to the surety is relatively low, so the premium rate will also be low—potentially as low as one percent.  A low credit score indicates greater risk to the surety, which means the premium rate will be much higher.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about DMEPOS bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts today.

CONTACT US FOR A

FREE DMEPOS BOND QUOTE

What Are DMEPOS Bonds?

DMEPOS stands for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies. DMEPOS bonds are surety bonds that DMEPOS suppliers must purchase before they are allowed to submit bills to Medicare or Medicaid. They are designed to protect the Medicare and Medicaid programs against financial loss due to fraudulent billing by DMEPOS suppliers and to provide a source of funds for recovering damages. They also provide protection when DMEPOS suppliers are overpaid due to unintentional billing errors.

Although there are a few exemptions, the vast majority of DMEPOS suppliers are subject to the $50,000 bonding requirement. Certain providers of physical and occupational therapy who practice privately do not have to be bonded if they meet all three of these conditions:

  • They are the sole owners of their business
  • The only people they provide DMEPOS items to are their own patients
  • Their only Medicare or Medicaid billing is for DMEPOS items.

And certain DMEPOS suppliers will need to purchase more than $50,000 worth of DMEPOS coverage, specifically suppliers who:

  • Operate multiple sites, each with its own NPI number ($50,000 in coverage is required for each such site), or
  • Had their license suspended, were convicted of a felony, and/or lost their Medicare or Medicaid billing privileges due to infractions committed in the preceding 10 years (an additional $50,000 in coverage is required for each infraction).

The surety bond agreement for a DMEPOS bond is a legally binding contract among three parties:

  • The “obligee” requiring the bond is the Centers for Medicare and Medicaid Services (CMS),
  • The “principal” is the DMEPOS provider required to purchase the bond, and
  • The “surety” is the company guaranteeing the bond.

The obligee can file a claim against the principal’s bond to recover overpayments, whether they were the result of fraud or error.  The terms of the surety bond agreement legally obligate the principal to pay all claims deemed by the surety to be valid. To expedite resolution of a valid claim, the surety typically pays it on behalf of the principal, but that payment is an extension of credit to the principal, who must subsequently repay the surety.

The annual premium for a DMEPOS bond is a small percentage of the $50,000 required bond amount. What that percentage (the premium rate) will be depends on the surety’s assessment of the risk inherent in extending credit by paying claims on behalf of the principal. The best measure of that risk is the principal’s personal credit score.

When a principal has a high credit score, the assumption is that the risk to the surety is relatively low, so the premium rate will also be low—potentially as low as one percent.  A low credit score indicates greater risk to the surety, which means the premium rate will be much higher.

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