The Centers for Medicare & Medicaid Services (CMS) is requiring certain durable medical equipment suppliers to post a surety bond, it has revoked the billing privileges of more than 1,100 medical equipment suppliers, and is suspending payments to some home health agencies.

CMS has issued a final surety bond regulation, required by the Balanced Budget Act of 1997, which makes certain suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) to post a $50,000 surety bond. Existing suppliers must comply by Oct 2, 2009, and newly enrolling suppliers must comply by May 4, 2009.  

The requirement was due in part to the large number of improper and potentially fraudulent payments to medical equipment suppliers for furnishing medical equipment and devices to people with Medicare. The 2007 Medicare error-rate report found some $1 billion in improper payments for medical equipment and supplies.

CMS aims to limit the Medicare program risk from fraudulent equipment suppliers and to help ensure that only suppliers who remain in the program provide items to Medicare beneficiaries that are considered reasonable and necessary from legitimate DME suppliers.

Suppliers who have had certain adverse legal actions imposed upon them in the past may need to post a higher bond amount. All newly enrolling suppliers that meet the requirements of the rule will be required to have a surety bond before they can enroll in the Medicare program. More information about the new regulation can be found at

Some companies or organizations that supply items are exempt from the bond requirement, including certain physicians and non-physician practitioners, physical and occupational therapists, state-licensed orthotic and prosthetic personnel, and government-owned suppliers.

To prevent fraud, CMS has revoked billing privileges of 1,139 DMEPOS suppliers as part of the DMEPOS High-Risk Suppliers Demonstration. The project began in October 2007 and focuses on DMEPOS suppliers in South Florida and the Los Angeles metropolitan area. These suppliers, who were paid a combined total of $265 million between 2005 and 2007, lost their billing privileges for not re-enrolling in the Medicare program and for not meeting Medicare’s supplier standards.

CMS continues to fight waste, fraud, and abuse by home health suppliers in the Dade County, Fla, area by suspending payments and taking other payment and review actions. In October, CMS rolled out efforts to address potential waste, fraud, and abuse by suspending payments to 10 home health agencies, and is continuing to review claims and payments to other agencies.

 [Source: CMS]