Avoiding Frivolous Surety Bond Claims
Don't jeopardize your business's Medicare billing privileges, or your personal credit.
Every month, our bond department at VGM Insurance takes calls and emails from concerned providers about a claim against their Medicare Surety Bond. Some of these providers understand that a surety bond isn’t insurance, but is actually a financial guarantee product. The bond acts similar to a bank loan. If the bond is ever drawn upon, the individual that purchased the bond will have to repay that money. Many callers also understand that besides jeopardizing their Medicare billing privileges they are also endanger their personal financial future and their personal credit report. Wehave seen tragic consequences as a result of frivolous surety bond claims.
As the largest writer of Medicare and Medicaid Surety Bonds in the country, VGM Insurance has a unique prospective on how claims against surety bonds are handled. Because we sit on the same side of the table as the provider we also have a biased view on the surety bond claim process. While it would be easy to have this article address many of the frustrations with a flawed system, it is more important and a better use of everyone’s time to address ways that providers can avoid frivolous claims.
What Constitutes a Frivolous Claim?
First, let me help to define the term “frivolous.” Webster defines frivolous as, “Of little weight or importance; not worth notice.” Let’s take that definition further and put some context around it concerning surety bond claims. Here are afew basic stats concerning what we’ve seen with VGM surety bond claims:
- 65 percent of all submitted claims are under $1,000.
- 47 percent of all submitted claims are under $200.
- VGM has received a claim for 51 cents — no kidding! We have seen other claims that can’t justify the human capital or even the postage to process.
- 79 percent of all claims are paid by the provider. This is an inappropriate use of resources because if surety companies are expected to act as collection agencies for CMS then surety bond prices will increase. The surety bond was not put into place to act as a collection agency for small amounts.
Frivolous claims could be identified as claims against a surety that are for a trivial dollar amount and something that the provider has intentions or settling with the DMEMACs, but for whatever reason hasn’t been given theproper opportunity to settle up, or possibly the case is still in appeal.
All providers, that bill Medicare, would agree that the risk of jeopardizing your billing privileges over a $.51 claim is not a wise business decision. Sohere are a few key tips to help keep your billing privileges intact:
Hire and train the best billing expert you can find.
This is the most successful solution to help keep annoying billing issues from becoming doorclosing events. First, review your current staff; do you have an expert that knows the ins and outs of Medicare billing? If not do you have a staff member that you can train to become an in-house expert? If not you will need to start looking at hiring someone that is currently an expert or someone that can become your expert. Once you have that person, make sure you invest in their training. There are multiple opportunities to attend billing sessions around the country: Medtrade; most state associations’ conferences; at VGM, we offer Peggy Walker’s Billing and Reimbursement Road Show; and there is a plethora of other training opportunities including webinars. Your in-house billing expert needs to attend several of these events every year to keep up on changesand to build a network of peers that they can reach out to for advice.
Have a robust software program that can help to avoid billing errors.
I am familiar with Brightree but I know other systems that can also help your billing department to avoid routine mistakes. To error is human butcomputers and good software solutions can help decrease errors drastically.
Follow guidelines — dot all “I”s and cross all “T”s.
We see countless examples where there is a coding issue or proper documentation is not included. Most of this can be fixed by following step number No. 1 above but even after you have an in-house billing expert you need to make sure that your entire staff is following procedures and that everything is documented. Lack of documentation or incorrect documentation is the largest reason for appeals and surety bond claims. If you are in an appeal process, make sure that youkeep all documentation to help push back the surety bond claim.
Open your mail and act immediately.
Believe it or not, but the VGM bond team is told daily by upstanding providers that they didn’t know they had a claim against them. Often later in the process it is discovered that they were notified at some point and either choose to ignore a request or didn’t understand what was being requested. If something doesn’t sound right, haveyour billing expert investigative and determine your options.
Watch for billing issues outside your primary DMEMAC jurisdiction.
Another area where claims arise is when a provider has supplied a piece of equipment to someone outside of their primary DMEMAC. Providers often know that if they have billed something incorrectly the DMEMAC will recoup the refund out of future billings. When a provider doesn’t do a lot of billing in a particular DMEMAC, there may not be enough future revenue to recoup the error billing. When that is the case the secondary DMEMAC will go ahead andissue a claim on a bond after the 100th day of no recoupment.
Stay on top of address and ownership changes.
Claims also arise when a company sells their business to another company or when a company closes. Though providers are supposed to keep updated address and contact information with CMS this often gets overlooked when a provider is leaving the industry. RAC audits can look back five years so if you are personally liable on a surety bond, it is important that you keep your contact information on filewith CMS so you will not be surprised with a surety bond claim.
We have seen credit reports become damaged, and Medicare billing privileges suspended or even revoked because of surety bond infractions. Do yourself and your company a favor and follow these 6 guidelines to help reducefrivolous claims on your Medicare surety bond.
As a note, at the time of this writing the OIG just released a report “Surety Bonds Remain an Underutilized Tool To Protect Medicare From Supplier Overpayments” (see “News, Trends & Analysis” on page 8 to read more), so we can all assume there will be more coming on this subject in the next few months. Stay tuned, and we will continue to lobby on your behalf and keepyou informed.
This article originally appeared in the May 2013 issue of HME Business.
Warren G. Freeman, CFP is director of Sales and Marketing for VGM Insurance and manages the VGM Surety Bond Department. Freeman can be reached at firstname.lastname@example.org, or 800-362-3363.