DMEPOS Bond Definition and Example

A durable medical equipment, prosthetics, orthotics, and supplies bond, or DMEPOS bond, is a type of surety bond that DMEPOS suppliers must obtain. Medicare/Medicaid requires this bond to prevent unethical behaviors by healthcare equipment providers and suppliers, such as fraudulent billing. The minimum bond requirement is $50,000 and premiums can start at $250 for those with good credit.

Since DMEPOS bonds are unique to healthcare equipment suppliers, they can be a little complicated. This DMEPOS bond guide breaks down what you need to know, including:

• Definition & Example
• How It Works
• Cost & Requirements
• Where to Get & How to Apply
• FAQs
• DMEPOS Bond Definition and Example

A durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) bond is a type of surety bond specifically for businesses that sell DMEPOS equipment. The Centers for Medicare & Medicaid Services (CMS) requires this bond as a deterrent to fraudulent billing.  The bond also provides a financial guarantee for businesses to conduct their business according to the law — if a claim is filed for wrongdoing, then the claimant can be reimbursed for their losses.

A DEMPO bond is a contractual arrangement between three parties: 

• Principal: The business selling DMEPOS equipment (you).
• Obligee: The entity requiring the bond (Centers for Medicare & Medicaid Services).
  
• Surety: The company that sells that bond and guarantees to the obligee that you conduct your business lawfully. (The DMEPOS Bond is also called a Medicare surety bond, Medicare bond, or medical supply surety bond.)

What is an example of a DMEPOS bond?

A business specializes in selling hospital beds and commode chairs. However, it was discovered that the business defrauded Medicare and collected money that they were not entitled to. Medicare files a claim on the DMEPOS bond to collect the amount that is owed back to them.

How Does a DMEPOS Bond Work?

The function of a DMEPOS bond is to protect Medicare/Medicaid against DMEPOS providers that engage in unscrupulous business practices. If Medicare/Medicaid suffered any financial loss due to such practices, they can file a claim against the DMEPOS bond to get reimbursed for their loss. 

Shady business activities the bond protects against typically revolve around fraudulent billing. It’s important to note that any fraudulent activity — intentional or not — is eligible for a claim against the bond and will likely result in Medicare/Medicaid recouping their loss.

Similar to other bonds, DMEPOS bonds have minimum bond requirements, premiums, and terms:

• Bond amount: The minimum amount the principal must be bonded for and the highest amount Medicare can claim — the current minimum amount is $50,000.
• Premium: How much the principal must pay to obtain the bond — typically a .05% to 5% and up of the minimum bond amount required.
• Term: How long the bond lasts until it must be renewed — usually one year.

What happens when a claim is filed?

When a claim is filed against the DMEPOS bond, it will trigger an internal investigation by the surety. Since Medicare/Medicaid will likely have proof of fraudulent activity committed against them, those claims will typically be decided in their favor. However, if there is no proof of any illegal activity occurring, then you will not be financially liable for any claims.

Keep in mind that you are still financially liable for any awards granted on approved claims. The difference is that you now owe this amount to the surety who satisfied the claim on your behalf.

DMEPOS Surety Bond Cost & Requirements

A business owner with good credit can expect to pay anywhere from $250 to $2,500 (.05% to 5% of the $50,000 minimum requirement). Those with poor credit can expect to pay even higher premiums of $3,000 to $6,000 and up (6% to 12%+). Rule of thumb: good credit and solid business financials will generally qualify you for lower premiums.

It’s also important to note that the $50,000 minimum requirement is not fixed. In some cases, a higher minimum may apply to your specific business or state. For example, you may be subject to a higher minimum if adverse action was imposed against your business within the past 10 years.

You will need to obtain a DMEPOS bond for each location with its own National Provider Identifier (NPI) — this is the unique identification number assigned to each qualified health care provider location. If your business has six NPI locations, that you must be bonded for $300,000.

Penalties for not obtaining a DMEPOS bond

If you fail to obtain a surety bond for the appropriate amount, your billing privileges can be revoked.

Exemptions:

Under 42 CFR 424.57(c)(26), certain suppliers may qualify for DMEPOS Accreditation Exemption and won’t need to obtain a surety bond. These businesses include:

Certain government-owned DMEPOS suppliers that can secure a surety bond equivalent.

State-licensed orthotic and prosthetic personnel in private practice that solely own the business and bills for DMEPOS supplies.

Physicians and non-physician practitioners that furnish DMEPOS items as part of their professional services.

Physical and occupational therapists that solely own the business and furnish DMEPOS items as part of their professional services.

How Do I Get a DMEPOS Bond?

DMEPOS providers will typically buy surety bonds online through traditional insurance companies or specialized sureties. Fortunately, the online application is often straightforward and quick:

• Apply online with your business name, address and National Provider ID (NPI).
• Receive a premium quote based on your qualifications.
• Purchase and obtain your DMEPOS surety bond (or continue shopping around).
  
• File your DMEPOS bond to Medicare/Medicaid. Keep in mind that your state may require you to file using a specific DMEPOS bond form.

Grab Your Free Quote from Worldwide Insurance Inc.

Obtaining a DMEPOS bond is easy when applying with Worldwide Insurance, Inc. Just fill out our initial application form and get an instant quote in minutes. With rates starting as low as 1%, we issue all types of surety bonds in all 50 states. No credit check required and no obligation.

DMEPOS Bond FAQs

What does DMEPOS mean?

DMEPOS is an acronym for durable medical equipment, prosthetics, orthotics, and supplies. Businesses that sell these types of equipment are required by Medical/Medicaid to obtain a DMEPOS bond.

What is a Medicare DMEPOS bond?

A DMEPOS bond is a specific surety bond required for business owners that sell medical equipment, prosthetics, orthotics and supplies. The bond protects Medicare/Medicaid against illegal business practices — usually fraudulent billing.

How much does a DMEPOS bond cost?

DMEPOS bonds can cost between $250 and $6,000 (this is based on .05% to 12% of the current minimum bond requirement of $50,000). Business owners with good credit and business financially will usually qualify for lower premiums.

How long does a DMEPOS bond last?

Terms on DMEPOS bonds typically last one year. You would need to pay another annual premium to renew your bond term.

Can I cancel my bond?

Yes, if you’ve already filed your DMEPOS surety bond form, you may cancel it with a 30-day written notice. A refund by the surety is not always guaranteed. Keep in mind that operating without a bond or lapses in your bond coverage can result in your billing privileges getting revoked.

Can I get a bond with bad credit?

Yes, bad credit applicants can still get bonded but may face higher premiums. Worldwide Insurance, Inc. works with thousands of business owners — even those with low credit — to help them meet their bonding requirements. Apply now for your free quote.

What type of surety bond do I need?

Visit our list of bonds by state to get a closer idea of your bonding requirements. To learn more about surety bonds in general, check out our free surety bond guide.