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Agency also revokes billing privileges for more than 1,100 suppliers in Florida, L.A.

The feds continue to come down hard on fraud and abuse in the durable medical equipment industry, and the result is making life more difficult for legitimate suppliers -- especially small ones.

The Centers for Medicare & Medicaid Services has issued the final rule for the DME surety bond, which it proposed in August 2007. CMS will require existing suppliers to obtain a $50,000 bond by Oct. 2. New suppliers applying for Medicare enrollment would need a bond even quicker -- by May 4, CMS says in a release.

The amount of a bond could go even higher for "suppliers who have had certain adverse legal actions imposed against them in the past," CMS says. CMS estimates a $50,000 bond will cost suppliers about $1,500 a year, but the National Association for Independent Medical Equipment Suppliers puts the average cost at closer to $2,500.

The bond amount was reduced from the proposed $65,000 level to ease the financial burden on suppliers, NAIMES points out.

The bond requirement aims "to deter illegitimate suppliers from signing up with Medicare and reimburse Medicare for overpayments," CMS Acting Administrator Kerry Weems said in a speech back in October. "This is an important step to kick fraudulent suppliers out of the program and keep them out."

CMS estimates that 25,000 suppliers will exit the business due to the bond, NAIMES says. But many of those will be small independent suppliers who can't afford it, "ultimately serving a big blow to small businesses," the trade group maintains.

Exceptions: Not everyone will have to get a bond. "Certain physicians and non-physician practitioners, physical and occupational therapists, state-licensed orthotic and prosthetic personnel, and government-owned suppliers" are exempt, CMS clarifies.

Details: Suppliers must obtain a bond for each National Provider Identifier (NPI) number, not each National Supplier Clearinghouse (NSC) number, NAIMES explains.

In other fraud and abuse news: CMS's enrollment demonstration for suppliers has resulted in revoked billing privileges for 1,139 suppliers, the agency reports. The demo began in October 2007.

The suppliers in South Florida and the Los Angeles area "lost their billing privileges for not re-enrolling in the Medicare program and not meeting Medicare's supplier standards," CMS says in a release.