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Medicare / DMEPOS Surety Bonds Explained

The Medicare Surety bond, or Durable, Medical, Equipment, Prostetics Orthotics, Suppliers, surety bond (DMEPOS) bond is a $50,000 bond required by the Centers for Medicare & Medicaid Services, (CMS) an agency of the United States Department of Health and Human Services. While the bond has been low in risk, it is relatively new requirement and the surety industry is beginning to see some increased claims activity associated with this surety bond.

Since January of 2009, Medicare surety bonds, or DMEPOS surety bonds, are mandatory for manufacturers and suppliers of durable medical equipment, prosthetics, orthotics and supplies that bill or receive funds from the Medicare and Medicaid systems. The bond requirement is imposed by the Centers for Medicare & Medicaid Services (CMS). The requirement is aimed at curbing medical fraud and malpractice.  The FBI estimates that in 2012, the cost of Medicare fraud ranged from $75 billion to $250 billion in 2012.

Like most commercial surety bonds, personal credit is the primary underwriting tool of the surety companies. With good credit and at least three years in business, the bond can be purchased for as little as 1/2%.  The standard rate in the industry is 1%.  With challenged credit, rates can vary from 2% to as much as 10%.

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