Tuesday, February 12, 2008

Why increase the surety bond by 1000 percent before implementing the original amount?

A law passed in 1997 requires a $50,000 surety bond for DME providers as a deterrent to fraud and abuse. However, the federal government has never actually implemented the surety bond requirement for the DME sector. Next, the Centers for Medicare and Medicaid Services proposed that the amount increase to $65,000.

And now a Senate bill introduced last week would impose a $500,000 surety bond requirement on providers of durable medical equipment (DME) under Medicare. Why increase the surety bond by 1000 percent before the original $50,000 bond has even been implemented?

Insurance experts say a $500,000 surety bond would require that DME providers put up collateral to back the half-million-dollar bond, on top of the $10,000 to $20,000 cost of the bond. A bond of this amount would put thousands of small homecare companies out of business.

These bonds are all being proposed in the name of fighting fraud and abuse, however, it is essential for public and Congress to understand that the Medicare program has failed to effectively exercise its already ample authority to combat fraud and abuse. And while increased civil and criminal penalties may help thwart fraud and abuse in Medicare, most of the people who willingly engage in such activity will not be deterred by higher penalties.

How would a $500,000 bond affect your DME company?

See AAHomecare’s response to this new bill. http://www.aahomecare.org/displaycommon.cfm?an=2

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