Phil Pavarini is a licensed insurance producer and is compensated when a bond is placed through this site. This page is general information, not legal, tax or fiduciary advice, and it is not a substitute for reading your plan document or contract or for advice from your own counsel. Figures shown are current as of the date on this page.
A supplier of durable medical equipment, prosthetics, orthotics and supplies that wants to bill Medicare has to post a surety bond. The rule is 42 CFR 424.57(d). It applies when a supplier enrolls, changes ownership, or responds to a revalidation or reenrollment request.
The base amount is $50,000 for each NPI for which the supplier seeks billing privileges. The bond sits alongside the other enrollment conditions in the same regulation, including accreditation, which 424.57(c)(22) requires for each supplier location.
What the bond pays#
The bond protects Medicare, not the supplier. When CMS notifies the surety that the supplier owes unpaid claims, civil money penalties or assessments, the surety must pay within 30 days, up to the bond amount.
Because it is a surety bond, the supplier and its owners sign an indemnity. Whatever the surety pays to CMS, it will look to the supplier to repay.
Per NPI, not per company#
The $50,000 attaches to each NPI the supplier bills under. A supplier with several NPIs needs coverage for each of them. Count your NPIs before you apply, because a bond for the wrong total is a bond that does not meet the rule.
Ready to bond your NPI for enrollment? Apply for this bond, or read the full bond details.
The elevated amount#
CMS can require more. Under 424.57(d)(3), a supplier may have to carry an elevated bond in addition to the $50,000 base: $50,000 for each occurrence of an adverse legal action in the 10 years before its enrollment, revalidation or reenrollment. The CMS contractor sets the required amount.
If your history includes an adverse legal action, expect the question and find out the required amount before you apply.
Continuous coverage and cancellation#
The bond has to be continuous. A gap is not a paperwork problem, it is a lapse in a condition of billing Medicare. If a supplier cancels its bond, the regulation requires written notice at least 30 days before the cancellation takes effect.
Exemptions#
Section 424.57(d)(15) exempts a short list of suppliers, each with conditions:
- Certain government-operated suppliers that have a comparable bond under state law.
- Certain state-licensed orthotic and prosthetic professionals in private practice.
- Physicians and nonphysician practitioners furnishing items to their own patients.
- Certain physical and occupational therapists in private practice furnishing items to their own patients.
Several of these turn on details such as solo practice, who the patients are and what is billed. Read the exemption in the regulation itself before relying on it, rather than a summary, including this one.
In this section
Common questions
How much is the DMEPOS surety bond?
$50,000 for each NPI for which the supplier seeks Medicare billing privileges, under 42 CFR 424.57(d). CMS can also require an elevated bond of $50,000 per occurrence of an adverse legal action in the 10 years before enrollment, revalidation or reenrollment, in addition to the base amount.
When do I need it?
When the supplier enrolls in Medicare, makes a change in ownership, or responds to a revalidation or reenrollment request. It then has to stay in force continuously.
What does the bond cover?
Amounts the supplier owes Medicare: unpaid claims, civil money penalties and assessments. The surety must pay within 30 days of notice from CMS, up to the bond amount, and then looks to the supplier to repay it.
Am I exempt as a physician?
Physicians and nonphysician practitioners furnishing items to their own patients are among the exemptions in 42 CFR 424.57(d)(15). The exemptions have conditions, so confirm yours against the regulation before relying on it.
How much notice do I have to give to cancel?
The regulation requires written notice at least 30 days before the effective date of the cancellation. Cancelling the bond without replacing it puts your Medicare billing privileges at risk.
Enrolling or revalidating with Medicare?
The application covers the $50,000 DMEPOS surety bond for each NPI you bill under. The surety underwrites the supplier, and the bond must stay in force continuously.
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