Overpayment Claims Jeopardize HMEs’ Surety Bonds

DME MACs making claims as small as $16, undermining bond underwriting.

DME MACs are making claims on surety bonds to collect overpayments as small as $16, according to HME providers notified about the claims by their surety companies, according to a report from the American Association for Homecare.

This could greatly reduce the willingness of surety bond companies to provide such bonds for HME providers. The bonds are required in order for HME providers to file Medicare claims.

As a result, various industry stakeholders including AAHomecare, Bond Safeguard, Lexon Surety, The Wayne van Halem Group, US Rehab, VGM and VGM Insurance Group, submitted comments and recommendations to the Centers for Medicare and Medicaid services this week, calling attention to the problem suggesting alternative approaches DME MACs could take in the case of overpayments.

 “If the program continues in its current form, there is great concern that surety bonds will become very hard to underwrite, forcing surety companies to exit this line of business, thus reducing the supply of surety bonds,” the letter stated. “That would drive up the cost to an amount not manageable for the typical home medical equipment (HME) provider.”

The stakeholders recommend the following alternative course of action, including:

  • Only allow DME MACs to trigger a surety bond if a threshold dollar amount is reached.
  • Provide better notice to HME providers when a surety bond is about to be triggered.
  • Give surety bond companies more time to notify HME providers that their bonds are about to be triggered so that the provider can take corrective action.

The group also stressed in its comments that the original intent of the surety bond program was to be an anti-fraud deterrent by serving as an extra check to ensure that HME providers participating with Medicare are legitimate companies. The surety bond program should not be used as an overpayment collection program, the stakeholders stated.

To read a full summary of the stakeholders’ concerns and suggestion solutions, read the letter at:


About the Author

David Kopf is the Executive Editor of HME Business and DME Pharmacy magazine. Follow him on Twitter at @postacutenews.


Fri, Jun 22, 2012 Richmond, VA

At first they didnt access Surety Bonds and now they are usung them as an overpayment collection program. There is no middle road with CMS, just one extreme to the other. When is Washington going to wake up and see that this entire branch of government needs a drastic overhaul?

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