DMEPOS Surety Bond

The Centers for Medicare & Medicaid Services (CMS) published a final rule titled, "Medicare Program: Surety Bond Requirement for Suppliers of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)" in the Federal Register on January 2, 2009.  This final rule implemented Section 4312(a) of the Balanced Budget Act of 1997 and requires certain DMEPOS suppliers to obtain and maintain surety bond on continuing basis.  Section 4312(b) requires that a surety bond be in amount of not be less than $50,000.   

Enrolled DMEPOS suppliers, subject to the bonding requirement, are required to obtain and submit $50,000 bond for each National Provider Identifier (NPI) by October 2, 2009 to the National Supplier Clearinghouse (NSC). Since DMEPOS suppliers must obtain an NPI by practice location, except for sole proprietorships.  For example, an organizational DMEPOS supplier with 20 practice locations would be required to secure a $1 million surety bond.

DMEPOS suppliers exempt from bonding requirement: (1) Government-owned suppliers that have provided CMS with a comparable surety bond under state law. The surety bond shall state that CMS is an obligee and cover obligations concerning claims, (2) State-licensed orthotic and prosthetic personnel in private practice making custom made orthotics and prosthetics if the business is solely-owned and operated by said personnel and is billing only for orthotic and prosthetics, and supplies, (3) Physicians and non-physician practitioners if the DMEPOS items are furnished only to his or her patients as part of his or her professional service, and (4) Physical and occupational therapists if: (1) the business is solely-owned and operated by the therapist, and (2) if the DMEPOS items are furnished only to his or her patients as part of his or her professional service.

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For additional information regarding DMEPOS accreditation, please return to the main provider enrollment web page and select DMEPOS accreditation from list of topics on the left side of the screen.

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When submitting your DMEPOS surety bond to the National Supplier Clearinghouse (NSC), you are required to submit sections 1, 2A1, 12, and either 15 (if you are the authorized official) or 16 (if you are the delegated official) of the Medicare enrollment application (CMS-855S).  By submitting the required sections of the CMS-855S, you will help to ensure that NSC is able to correctly associate your DMEPOS surety bond to your enrollment record.

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If your pharmacy is enrolled as a DMEPOS supplier with the NSC and bills the DME MAC (formerly a DMERC) for non-accredited products, including Epoetin, immunosuppressive drugs, infusion drugs, nebulizer drugs, or oral anticancer drugs, you are required to have a surety bond.

Note:  The DMEPOS Surety Bond final rule did not establish an exception to the bonding requirement for pharmacies.  Accordingly, pharmacies continuing to participate in the Medicare program as a DMEPOS supplier must have a surety bond.  Any supplier enrolled with the NSC is considered a DMEPOS supplier.