Medicare Compliance & Reimbursement

A new Senate bill could be the beginning of the end for small suppliers of home medical equipment.

The bill, the Medicare Fraud Prevention Act of 2008 (S. 2603), seeks to impose a $500,000 surety bond requirement on Medicare-certified providers of durable medical equipment. Sen. Mel Martinez (R-FL) introduced the bill on Feb. 7. Co-sponsors include Sens. John Cornyn (R-TX), Norm Coleman (R-MN), Lamar Alexander (R-TN), David Vitter (R-LA) and Jim DeMint (R-SC).

The requirement would put thousands of small home care companies out of business, warn industry representatives including the American Association for Homecare.

"While we totally support all efforts to control fraud and abuse in Medicare, [we are] adamantly opposed to any surety bond mandate for DME suppliers," says Wayne Stanfield of the National Association of Independent Medical Equipment Suppliers.

Background: A law passed in 1997 requires a $50,000 surety bond for DME providers as a deterrent to fraud and abuse, but the government has never implemented the bond requirement for the DME sector.

Last August, the Centers for Medicare & Medicaid Services proposed increasing that amount to $65,000.

Insurance experts say a $500,000 surety bond would require that DME providers put up collateral to back the half-million-dollar bond, on top of the $10,000 to $20,000 cost of the bond, notes AAHomecare in a bulletin to members.