The Centers for Medicare and Medicaid Services (CMS) announced a new rule requiring suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) to obtain a surety bond valued at no less than $50,000. According to its final rule, “Medicare Program: Surety Bond Requirement for Suppliers of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS).” The surety bond requirement applies to many occupational therapists who furnish DMEPOS to patients and bill Medicare for orthotics reimbursement using L-codes. DMEPOS suppliers must obtain a $50,000 surety bond and submit required documentation to the National Supplier Clearinghouse (NSC) in order to continue billing under the Medicare program.
AOTA was successful in its efforts to secure an exemption for certain occupational therapy practitioners in private practice,.But the surety bond requirement applies to many occupational therapists who furnish DMEPOS t patient and bill Medicare for orthotics reimbursement.
If you are an occupational therapist who does not fit within the narrow confines of the surety bond exemption, you will need to immediately secure a bond from an authorized surety and submit the required documentation to Palmetto GBA, the NSC.
Exemption for Occupational Therapists
Only occupational therapists in private practice who solely own their business and furnish DMEPOS only to their individual patients may qualify for Medicare’s exemption to the bonding requirement. The exemption as stated in the regulation 42 CFR § 424.57(d) reads:
Physical and occupational therapists in private practice are provided an exception to the surety bond requirement if
the business is solely-owned and operated by the physical or occupational therapist;
the items are furnished only to the physical or occupational therapist’s own patients as part of his or her professional service; and
the business is only billing for orthotics, prosthetics, and supplies.
Recent guidance from the NSC suggests that the exemption is being interpreted by Medicare much more narrowly than originally thought. Specifically, FAQs on the NSC Web site (September 10, 2009) state that an occupational therapy practitioner who owns a business with a spouse or business partner does not qualify for the exemption. In addition, an occupational therapy practitioner who bills Medicare directly for the orthotics he or she personally furnishes but who works in physician-owned practice must also secure a DMEPOS surety bond (even though the physician owner will not have to secure a bond).
Can group practices avail themselves of the exceptions to the surety bond requirements? In other words, are the exemptions for physicians, non-physician limited to sole proprietorships and solely-owned LLCs and corporations?
As a general rule, a group practice is eligible for an exemption to the surety bond if each member of the group would—if he/she was operating as a solo practitioner—qualify for the exemption on his/her own. Thus, for instance, if three prosthetists are in private practice together, each prosthetist must be licensed by the State and have an ownership interest in the business; moreover, the three prosthetists must be the only owners and operators of the business. Likewise, if two physicians operate their own group practice, each physician in the practice must furnish DMEPOS items only to his or her own patients as part of his or her own service in order for the physician group to qualify for the bond exemption.
Suppose a physical therapist, occupational therapist, prosthetist or orthotist (hereinafter referred to as “the practitioner”) is employed by a physician practice. The practitioner is enrolled as a DMEPOS supplier. The practitioner performs all of his/her services as an employee of the physician practice—that is, he/she only services the physicians’ patients. Must the practitioner obtain a surety bond?
The practitioner must obtain a bond to maintain his/her enrollment as a DMEPOS supplier. He/she does not meet the requirements for the PT/OT or P/O exemptions (e.g., 100% ownership of the business), and there is no exception in the regulation for PT/OTs and P/Os that work exclusively within the physician practice setting.
To learn more about AOTA’s efforts to exempt all occupational therapists from the bonding requirement, please see AOTA's Comment Letter submitted to the head of CMS in October 2007.
Surety Bond Documentation
Proof of a surety bond was due to the NSC on October 2, 2009. (Occupational therapy practitioners who fall within the exemption do not have to submit any information to the NSC.) Pursuant to the regulation at 42 CFR § 424.57(d) and the Medicare Program Integrity Manual (Pub. 100-08), Ch. 10, § 21.7(A), the required surety bond documentation is as follows:
1. Cover Letter Explaining the Submission and Identifying the Supplier’s Practice Location
2. Signed CMS-855S Form
3. Bond Paperwork
A copy of the continuous surety bond agreement in an amount no less than $50,000. DMEPOS suppliers are required to obtain a $50,000 bond for each National Provider Identifier (NPI), not tax ID number. For example, if a supplier has two DMEPOS locations, each with its own NPI, a $50,000 bond must be obtained for each site, or a single $100,000 bond may be obtained to cover the two sites.
A guarantee that the surety will?within 30 days of receiving written notice from CMS containing sufficient evidence to establish the surety’s liability under the bond of unpaid claims, civil monetary penalties (CMPs), or assessments?pay CMS a total of up to the full penal amount of the bond, including the amount of any unpaid claims, CMPs, or other assessments plus accrued interest.
A statement that the surety is liable for all unpaid claims, CMPs, or assessments that occur during the term of the bond.
A statement that actions under the bond may be brought by CMS or by its contractors.
The surety’s name, street address or post office box number, city, state, and zip code.
Identification of the DMEPOS supplier as the “Principal,” CMS as the “Obligee,” and the surety (and its heirs, executors, administrators, successors and assignees, jointly and severally) as the “Surety.”
The above information should be compiled and mailed as soon as possible to: National Supplier Clearinghouse, P.O. Box 100142, Columbia, SC 29202-3142.
Authorized Surety Bond Suppliers
The Department of the Treasury maintains a list of authorized sureties from whom a bond can be obtained in the “Listing of Certified (Surety Bond) Companies.” These are the only sureties that can be used to comply with this DMEPOS surety bond requirement.
If your practice receives a letter from NSC revoking your Medicare billing privileges, AOTA members are requested to notify AOTA: firstname.lastname@example.org. Please also be aware that you have certain appeal rights, as outlined in the Medicare Program Integrity Manual (Pub. 100-08), Ch. 10, § 19.