CMS Updates Surety Bond Collection Procedures

The Centers for Medicare & Medicaid Services (CMS) has released Change Request (CR) 8636, updating the procedures used in the surety bond collection process. For purposes of the surety bond requirement, 42 Code of Federal Regulations (CFR) Section 424.57(a) defines an unpaid claim as an overpayment (including accrued interest, as applicable) made by the Medicare program to the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier for which the supplier is responsible. The CR 8636 revised procedures in making a claim against a surety bond are as follows:

• If 45 days have passed since the initial demand letter was sent to the DMEPOS supplier, full payment has not been received, and the supplier has a surety bond, the Durable Medical Equipment Medicare Administrative Contractor (DME MAC) will (subject to the situations described in Pub. 100-08, chapter 15, section 15.21.7.1(A)(2)(b)(1) through (5)) send an “Intent to Refer” (ITR) letter to the supplier and a copy thereof to the supplier’s surety. The letter and copy will be sent no earlier than the 45^th day and no later than the 60^th day after the initial demand letter was sent.
• If the DME MAC does not receive full payment from the supplier within 30 days of sending the ITR letter (and subject to the situations described in Pub. 100-08, chapter 15, section 15.21.7.1(A)(2)(b)(1) through (5)), the contractor will notify the surety via letter that payment of the claim must be made to CMS within 45 days from the date of the surety letter. The DME MAC will send the surety letter no earlier than 30 days and no later than 75 days after sending the ITR letter.
• Between eight and 12 calendar days after sending the surety letter, the DME MAC will contact the surety by telephone or e-mail to determine whether the surety received the letter.
• If the surety fails to make full payment within the 45-day timeframe, the DME MAC will continue collection efforts and notify the appropriate Center for Program Integrity (CPI) liaison via e-mail of the surety’s failure to make payment.

Some suppliers are exempt from the surety bond requirements. Physicians, nonphysician practitioners, physical therapists, and occupational therapists have exemptions from the requirements under certain circumstances. State-licensed O&P professionals in private practice may also qualify for an exemption. The professional staff must be licensed by the state; accreditation of the orthotic or prosthetic professional is not sufficient to trigger the exception. In states that do not offer such licenses, the exemption is not available. Specifically, the business must be solely owned and operated by O&P personnel who are making custom orthotics or prosthetics. In such a circumstance, the O&P professionals are responsible for the management and billing of products and services, thereby qualifying for the exemption.

CMS encourages interested parties to read CR 8636 in full, as it contains additional information about the revised collection procedures. Medicare’s surety bond requirements are summarized in article MM6392.